Equity and Redistribution of Income and Wealth

Introduction

This section explores the concepts of absolute poverty and relative poverty, which are fundamental in understanding the distribution of income and wealth within a society. These concepts are crucial for analyzing equity and the role of government in income redistribution.

Absolute Poverty

Absolute poverty refers to a condition where individuals lack the basic necessities for survival. This typically includes access to food, water, shelter, clothing, and healthcare. It is often measured using a fixed standard of living.

• Definition: Lack of basic necessities for survival.
• Measurement: Often measured using a poverty line representing the minimum income needed for survival.
• Context: Commonly observed in developing countries due to factors like conflict, natural disasters, and lack of economic development.
• Example: A person lacking access to clean water and adequate food would be considered to be in absolute poverty.

Relative Poverty

Relative poverty, in contrast to absolute poverty, is defined in relation to the living standards of others in a society. It describes individuals who have a significantly lower income or resources compared to the average income or living standards of the society in which they live.

• Definition: Being significantly worse off than others in society.
• Measurement: Often measured as a percentage of the median or average household income (e.g., 60% of the median income).
• Context: More prevalent in developed countries where there is a greater disparity in income distribution.
• Example: A family with an income significantly below the average income in their country would be considered to be in relative poverty.

Key Differences Between Absolute and Relative Poverty

Implications for Redistribution of Income and Wealth

The distinction between absolute and relative poverty has significant implications for policies aimed at income and wealth redistribution.

1. Absolute Poverty & Redistribution: Policies to address absolute poverty often focus on providing basic necessities like food assistance, healthcare, and housing. These are often considered a moral imperative.
2. Relative Poverty & Redistribution: Policies to address relative poverty often aim to reduce income inequality and promote social mobility. These might include progressive taxation, social welfare programs, and investments in education and healthcare to create more equal opportunities.

Conclusion

Understanding the difference between absolute and relative poverty is essential for analyzing the extent of inequality in a society and for evaluating the effectiveness of different policies designed to promote equity and redistribute income and wealth. The choice of which type of poverty to address, and the methods used to do so, often reflect different philosophical perspectives on the role of government and the desired level of social equality.