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Income Distribution _amp; Poverty

VIEWS: 11 PAGES: 86

									1
  RESOURCE
DISTRIBUTION
AND POVERTY

               2
  I. Introduction:
     Obstacles to
understanding Poverty


                        3
 Obstacle 1: “Knowledge”
The greatest obstacle to
 understanding is not
 Ignorance (the lack of
 knowledge),
 rather it is the Illusion of
 Knowledge.
                                4
           Obstacle 2: Limited
              Perspective
   Have you ever worked to support yourself?
   Have you ever worked to support someone
    else?
   Have you ever been hungry?
   What is the hardest trade-off you have ever
    made?
        Food        or        Medicine
        Electricity or        Rent

                                                  5
     II. Academic
      Discussion
of Poverty and Income
     Distribution

                        6
 A. Define Poverty
The condition of having less
 of the crucial resources than
 is required in order to
 survive.
What are the two terms that
 need to be clarified?
                                 7
   Define Poverty
The condition of having less
 of the crucial resources than
 is required in order to
 survive.
What are the two terms that
 need to be clarified?           8
         What are Crucial
           Resources?
   Sustenance
       Food
       Water
   Protection
       Shelter
       Clothing
       Medicine
       Knowledge / Weapons

                             9
       What are Crucial
         Resources?
Sustenance
     Food           Notice the Cross
     Water          Cultural aspect
Protection          of these items.
     Shelter
     Clothing
     Medicine
     Knowledge / Weapons
                                       10
       What are Crucial
         Resources?
Sustenance
     Food           Notice Money
     Water          is not mentioned.
Protection
     Shelter
     Clothing
     Medicine
     Knowledge / Weapons
                                        11
         Survive
Having sufficient health in
 order to maintain normal
 life expectancy under
 current conditions.


                              12
      Income Questionnaire
   Fill out the questionnaire
Poverty line for an individual
     2002 = $8,860
Poverty line for family of four
     2002 = $18,100
   What do you know now you did not
    know before?
   What do you understand now you did
    not know before?
   What Fallacy of Composition typical to
    conversations about poverty is belied by
    this data?                                 13
B. Academic Terminology
  Poverty Line
  Lorenz Curve
  Gini Coefficient
  Per Capita Income
  Headcount Index
  Unemployment Rate
  Median Income


                          14
       Poverty Line
The income level below which a
 typical non-farm family is
 judged to have insufficient
 resources to survive.
What does “survive” mean?
Why “non-farm family”?
                                 15
            Lorenz Curve




        20    40    60   80   100
Percent of Population Rank Ordered by Income   16
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   17
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   18
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   19
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   20
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   21
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   22
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   23
                            Lorenz Curve
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   24
          Gini Coefficient
A numerical representation of income
  distribution in a society.
 A score of .00 represents equal distribution
  of wealth in a society.
  0 = lowest possible score
The higher the score, the greater the
  discrepancy between the wealthiest and the
  poorest.
  The Maximum score = 1.00
1994 US Gini coefficient = 0.456


                                                 25
                          Gini Coefficient
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   26
                          Gini Coefficient
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   27
                          Gini Coefficient
Total of All Income




                                                       .00




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   28
                          Gini Coefficient
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   29
                          Gini Coefficient
Total of All Income




                                                        0.23




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   30
                          Gini Coefficient
Total of All Income




                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   31
                          Gini Coefficient
Total of All Income




                                                       0.81



                        20    40    60   80   100
                Percent of Population Rank Ordered by Income   32
   Per Capita Income
The National Income divided
 by the population
Some use per capita GDP as a
 reflection of a nation’s wealth
 and economic capacity
 US per capita GDP - $36,200
 Afghanistan p.c. GDP - $800
                                   33
  Headcount Index

The percentage of the
 population below the
 Poverty Line.

                        34
      Unemployment Rate
The percentage of people in the job
  market who are not employed
Just because you are not working does
  not mean you are “unemployed”
The crucial criterion is are you actively
  seeking employment?



                                            35
       Median Income
The middle of all those personal
 incomes in a country, rank
 ordered.
Why is this measurement used
 more often than “Average or
 Mean Income”?

                                   36
                         Median Income
                                                            Median
15                                                           Income is
12
                                                             used because
                                                             of the weight
9
                                                             of the extra -
6
                                                             ordinarily
3                                                            wealthy
0
     5
         25
              45
                    65
                         85
                              105
                                    125
                                          145
                                                165
                                                      185
                   Rank Ordered Incomes

                                                                          37
 III. Who is in
    Poverty?
A Demographic
    Analysis

                  38
    Demographic Factors
 Race   /Ethnicity
 Age
 Marital/ Family Status
 “Disability”
 Geography



                           39
        Race / Ethnicity
These figures are from 2000 Census:
 Total Headcount Index : 11.3%
 Blacks: 22% *
 Hispanic: 21% *
 Asian/Pacific Islander: 10.8% *
 Native American: 26%
 Non-Hispanic White: 7.5% *

                                      40
                    Age
Percentage of those over 65 in poverty:
  1959: 35%
  1969: 30%
  1978: 14%
  2000: 10. 2%
  Why the changes?
Percentage of those under 18 in poverty:
  1978 – late 1990’s: 20-25%
  2000 – 16.2%
  Why the changes?
Percentage of 45-65 in poverty:
  2000 – 7.6%                              41
        Marital Status
 Married-couple  Families: 4.7%
 Female, Single Head of
  Household: 24.7%
 More than 60% of Households
  below the poverty line are headed
  by a single parent

                                      42
           Marital Status
 Before we continue, a mention of
  the Law of Unintended
  Consequences:
(Like “Murphy’s Law”: Anything
  that can go wrong will”)
Solutions always create problems,
  usually difficult to predict.
                                     43
             Marital Status
Historical problem:
  Single parents have had the greatest financial
  burden.
Historical solution from the New Deal and Great
  Society Programs:
  Provide more benefits to single parents.
Resulting problem:
  Disincentive to marry
Which led to less familial responsibility and
  “connectedness” by fathers and ...
  more single parent households and ...
  “more” poverty

                                                   44
        Marital Status
1990s proposals to alleviate these
  historical errors:
“Deadbeat Dad” legislation
Provide incentives for poor women
  to marry
Can you project any problems
  created by the solutions?

                                     45
        “Disability”
A major at risk group is
 The Chronically Unemployed




                              46
The Chronically Unemployed

Those whose biological /
 physiological differences from the
 “normal” population make it more
 difficult to obtain and keep
 gainful employment.



                                  47
             “Disability”
A major at risk group is
 The Chronically Unemployed
   Physical Handicaps
     Congenital
     Acquired

 Mental Retardation
 Emotional Disturbance

                              48
               Geography
   What large areas of the country have higher
    concentrations of poverty?
     Northeast           10.3
     Midwest             9.5
     South               12.5
     West                11.9
   What small area types have higher
    concentrations of poverty?
    Suburbs (“Donut”) 7.8
    Inner cities         13.4
    Non-suburb rural 16.1
                                                  49
          Geography

What large areas of the world have
  higher concentrations of poverty?
 Sub-Saharan Africa
 Southeast Asia




                                      50
          Geography
Some historians have said
 “Geography is Destiny”
How does that concept apply to the
 study of poverty?
One answer:
 Property Taxes & Education

                                     51
             Time
Economically speaking, when
 would be some lousy times to be
 alive in the US?
    1838-41
    1858-59 (in the North)
    1907-08
    1929-39
                                   52
               Time
The definition of poverty we have used
 is cross cultural and objective.
However, the notion of “Poor”
 is not.
How has the meaning of “Poor” changed
 just this century?
How does that meaning change from
 place to place?

                                     53
IV. What Do We Do
  About Poverty?

If we should do anything at all.



                                   54
          IV. Part A
    Political Terminology
 Welfare Programs
 Poverty Programs
  (also called Anti-Poverty Programs)
 Social Programs
 Economic Stimulus Programs
 Entitlements


                                        55
         Welfare Program
A spending program to redistribute
  income/wealth from one group to another.
The connotation is that the primary recipient
  is economically stressed
However, this is not necessarily true.
Example: Post 911 Airline bailout
Also both liberals as well as conservative
  Deficit Hawks use as a synonym for
  Government Subsidies the term:
  “Corporate Welfare”
                                                56
 Poverty (or Anti-Poverty)
         Program
A program to diminish the
 negative effects of poverty OR
 to diminish the causes of
 poverty .



                                  57
            Social Program
Program to alleviate some major ill in
  the society at large
Problem examples:
   Poverty
   ChildAbuse
   Drunk Driving




                                         58
 Economic Stimulus Program
A program designed to increase government
  spending to get money into the economy so
  it can be spent by consumers / businesses,
Theoretically creating new jobs and more
  money.
This process has been called
  “Priming the Pump”
Most associated with What Economic
  Philosophy?
  Keynesianism

                                               59
             Entitlement
A spending program which guarantees
 some benefit from the government to
 eligible recipients.
Examples:
   Medicaid
   SocialSecurity
   Food Stamps
   Deposit Insurance



                                       60
    Political Terminology
How would you classify the following
 programs using these terms:
   Social Security
   Supplemental Security Income
   AFDC
      (now called TANF - Temporary
       Assistance to Needy Families)
   Food Stamps
   Public Housing
   Grassland subsidies to ranchers
   Public Education
  Obviously these are not mutually exclusive
    terms                                    61
           Mutually Exclusive
             Terminology
   Cash
                     In-kind
   Means tested
                       Income blind
 Symptom addressing
                       Cause addressing
Hint: Make a list of programs (Domestic and
  International). Then categorize them.


                                              62
           IV. Part B
      Causes of Poverty:
     Differing Perspectives
 Economic
 Moral
 Sociological
    Political / Legal
    Psychological / Educational
    Medical / Nutritional
    Et cetera
                                  63
     Economic Perspectives
 Microeconomic Explanation of Poverty
  Scarcity of Resources:
     Land - Capital - Labor
 Macroeconomic Explanation
  Uneven Distribution of Resources
Your solutions/approach to issues of
  poverty abatement are dictated by which
  explanation best resonates with you .

                                            64
            Moral Perspectives
   Blame the Victim
    The Social Darwinist approach
    “I have no responsibility”
   Blame the System
    The “Bleeding Heart Liberal” approach
    “We have to help people in need”
    Often “We” is people with more money
    than I have.
    A reminder that this is a continuum of
    attitude, not mutually exclusive
                                             65
Economic/Moral Perspectives

 How  do these Moral
  Perspectives parallel the
  previous Economic
  Perspectives?
 What are the “Blame the
  System” arguments of
  “Conservatives”?
                              66
   Differing Perspectives


Notice that the remaining
 perspectives are more
 complementary/supplementary
 than antagonistic



                               67
       Sociological Perspective
Two categories dominate as causes in the
  Sociological Perspective:
 Discrimination Analysis
    Primarily a Political / Legal issues approach
   “Cycle of Poverty” Analysis
    A”multidisciplinary” approach which
    incorporates Discrimination analysis into
    part of its thesis

                                                    68
   Sociological Perspective -
        Discrimination
Several Categories of Discrimination:
 Racial / Ethnic
 Gender
 Age
 Class
Two Types of Discrimination:
 Primary Discrimination
 Secondary Discrimination

                                        69
    Primary Discrimination
Treating someone differently in the
 present because of some apparent
 external difference or perceived
 internal difference.
The connotation is that the different
 treatment constitutes a fallacious
 analysis of the individual’s abilities.
What type of fallacy?
 Composition

                                           70
  Secondary Discrimination
Treating someone differently in the
 present as the result of that person
 being treated differently in the past .
Examples
The major rationale for:
 Affirmative Action


                                           71
       Affirmative Action
Using race, ethnicity, gender, age, or
 other attributes as ONE factor in the
 hiring, promotion, or (as in the case of
 colleges) accepting otherwise
 QUALIFIED applicants
As opposed to:
 Quota

                                            72
                   Quota
Using racial, ethnic, gender, age or other
 characteristics as the only or the
 primary consideration in hiring,
 promoting, or accepting applicants.
   Affirmative Action is constitutional
   Quotas are unconstitutional
   According to What Supreme Court Decision?
    Regents University California v. Bakke
    Narrowed slightly in Adarand Contractors v
    Pena

                                                 73
  Sociological Perspective -
 “Cycle of Poverty” Analysis
This approach emphasizes the aspects of
  poverty which are self perpetuating.
It incorporates information from
  sociology, psychology, medicine, law,
  environmental studies, economics and
  other disciplines to justify the thesis
  that there exists a phenomenon called:
  The Cycle of Poverty

                                            74
    The Cycle of Poverty
Those who are born in poverty are more
  likely to experience events which place
  them at greater risk than those who are
  born into more financially secure lives.
In this definition are two Probability
  Statements. What are they?



                                         75
    The Cycle of Poverty
Those who are born in poverty are
  more likely to experience events
  which place them at greater risk
  than those who are born into more
  financially secure lives.
In this definition are two
  Probability Statements. What are
  they?
                                      76
      “Cycle of Poverty” Analysis
    What are these “events” that increase the
       likelihood of experiencing poverty later ?
   Legal / Political Related Obstacles
        Primary / Secondary Discrimination
        in Employment, Housing, Financing
    Note : Your readings may emphasize racial discrimination, but do
    not neglect to consider other types, especially age and gender.
   Role Models
        Support of Education in Some Homes
        Most Visible Models of Economic Success in
              a Stereotypical Inner-City
        Sophistication of Money Management
                                                                       77
“Cycle of Poverty” Analysis
Economic Stresses
The Importance of Maximizing Savings
  regarding Susceptibility to Returning to
  Poverty
     Formula for Financial Security:
              P>C
Production must be greater than Consumption
  Application to DVCs and Macroeconomies
  Several “Bombs” await DVCs as they
     emerge from poverty:
                 Population Bomb
                 Debt Bomb
                 Environmental Bomb         78
     “Cycle of Poverty” Analysis
   Economic Stresses
    Environmental Racism”, “Environmental Classism”
        Would a toxic waste dump be located on the edge
        of East Cobb?
        Would a production facility that spews out toxic
        waste be located on Ridenour Estates?
        Why?
        Real Estate Prices are too high
        Factories and toxic waste sites are located on cheap
        land.
    So are poor people. Sometimes adjacent to each other.
                                                               79
    “Cycle of Poverty” Analysis
   Educational Experience
       Poor Tax base Equates to Poor Schools
       Poor Schooling Equates to Poor Economic
             Opportunity
   Education and Health
       Healthy Students Study Better
             US ranking among the 29 “Developed
                    Countries” in Infant Mortality:
                          Last
       Well-Nourished Students Study Better
       Nutrition and Neurological Development
             Conception through Age Three Neurological
             Development is Crucial and Permanent
                                                     80
     “Cycle of Poverty” Analysis
   Health and Productivity
    US examples:
        Lead Paint
        Hookworm
          Actually applies to All Tropical & Subtropical
              Countries
    Best example:
        Guinea Worm



                                                           81
  V. Welfare Checks
 and Reality Checks

Myths Concerning Poverty

                       82
Welfare Myth and
Reality Check
   Welfare programs cost so much they are the
    cause of our National Debt Crisis
   In 1985 AFDC (now TANF) cost the US
    Government
     $8 Billion
     5% of the Defense Budget
     5% of Social Security
     7% of the Interest on the National Debt

                                                 83
    Welfare Myth and
    Reality Check
   There is a Permanent Underclass which perpetuates
    itself
   There is a consistent percentage of the population
    below the poverty line @ +10%
   Before the Duncan and Coe Study it was assumed
    these were the same 10% of the population. What
    did Duncan and Coe discover?
    During the 10 years studied 25% of the population
    was below the poverty line at some time.
    49% of that group received assistance for less than
    two years.
    Only 4.4 % received assistance for more than 8 years.
                                                       84
    Welfare Myth and
    Reality Check
   People are poor because they refuse to work
    AND
   Poor people just mooch off of government
    welfare
   Duncan and Coe:
    Defined “Welfare Dependent” arbitrarily
       as having +50% of income from cash
       entitlements
    Only 34% of recipients were ever “dependent”
    Only 8% of all recipients were “dependent” for
       more than 8 years
                                                     85
86

								
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