Income Inequality, Poverty, Discrimination - Lesson

Income Inequality, Poverty, Discrimination

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What is poverty line?

Poverty line

Poverty line is

• an absolute level of income

• set by the federal government (3 times the cost of an adequate meal)

• for each family size

• below which a family is deemed to be in poverty.

It is adjusted every year to account for changes in the level of prices.

Poverty line computing

In the US, an adequate meal costs $5.57.

1 day we need to eat 3 times => $16.7/day

365 days/year => $16.7 * 365 = $6,104.5/year for 1 person

Family with 4 members => $6104.5 * 4 = $24,418

Therefore, the poverty line = $24,418

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What is poverty rate?

-> Make sure to prevent any duplication when counting
the number of people who are in poverty.

You have a high-income level, but your other family members have a low-income level.
-> Average
-> You are still considered as poor.

Poverty is correlated with

Age

These effects also work together:
Almost half
+ the children (age)
+ in black and Hispanic (race)
+ female-headed households (family composition)
live in poverty.

Race

Family Composition

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Describe three (03) potential problems
in interpreting the measured poverty rate.

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In-kind Transfers

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The economic life cycle

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Permanent Income

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Economic Mobility

Economic Mobility

the movement of people between income classes.

• Some reflect transitory variation in income.

• Some reflect more persistent changes in income.

• Many of those below the poverty line are there only temporarily.

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Utilitarianism

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Diminishing marginal utility

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Why does utilitarians reject complete equalization of incomes?

(The drawback (-) of utilitarianism in income redistribution)

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Liberalism

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[Liberalism]

maximin criterion

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[Liberalism]

social insurance

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Libertarianism

Multiple Choice

Libertarians focus on the process not outcome.

• True

• False

Multiple Choice

Robert Nozick argues that economic justice would result

if society chose a set of rules for the redistribution of income from behind a "veil of ignorance" and

he argues that the set of rules would be the maximin criterion.

• True

• False

Multiple Select

Which political philosophy suggest that income should be redistributed across the population?

• Utilitarianism

• Liberalism

• Libertarianism

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(2) arguments for minimum-wage laws

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(2) arguments against minimum-wage laws

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welfare

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criticism of welfare programs

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Supporters of welfare system say that

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Negative income tax

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[Negative income tax]

Pro & Con

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Advocates of in-kind transfers

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Critics of in-kind transfers