Income Inequality (9): Absolute and Relative Poverty

The problem of poverty and related problems such as income inequality have received a lot of attention on this blog, because I consider poverty to be one of the most urgent human rights problems. Now and again, I’ve also mentioned the possibility of distinguishing between different types of poverty, and one such possibility in particular, namely the difference between absolute and relative poverty. Absolute poverty meaning the lack of basic resources, and relative poverty meaning income inequality.

I’ve taken the view that absolute poverty is a more urgent priority than relative poverty, and that therefore measurements of income inequality – such as the Gini coefficient – are less relevant than measurements of absolute poverty – such as the $1 a day measure. It’s the absolute income of people that matters, not the fact that other people are richer than you are and can afford more luxuries, at least from a human rights point of view (the absence of a certain minimum amount of basic resources is a human rights violation in itself and renders many other human rights meaningless).

Inequality of wealth or income is less urgent than the fight against absolute poverty, and a lot of opposition to income inequality can be easily categorized as the politics of envy. If inequality really matters it is the inequality of opportunity and other types of inequality not related to wealth (<discrimination for example).

But this is perhaps putting it too strongly. There are negative effects of high levels of income inequality, for example on the adequate functioning of democracy. There is also a correlation between relative poverty and absolute poverty: countries with relatively unequal income distribution don’t score well on absolute poverty measures either.

Richard Wilkinson has pointed out, some time ago already, that relative poverty matters. Once economic growth has pushed up absolute (albeit average per capita) income levels and done away with penury, people tend to be more healthy and live longer if levels of income inequality are relatively low. Countries with lower per capita income levels but also lower income inequality, can do better in terms of public health than high income countries with higher levels of income inequality. Poorer countries with a more equal wealth distribution are healthier and happier than richer, more unequal ones. There’s also a link between inequality (measured not by Gini but by way of the concentration of wealth in the 10% richest people) and both life expectancy and child mortality.

Some of the reasons for this are the stress of living at the bottom of the pecking order, the stress of disrespect and the lack of esteem and respect (including self-respect).

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