# Causes Of Inequality And Poverty

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The central argument in this paper dwells into the idea of inequality and poverty; it begins by defining the characteristics of inequality and poverty which raises a paradox in its context. In parallel, it will suggest three policies to measure inequality and poverty. Then it illustrates on how growth affects inequality and poverty in terms of income distribution and development. Finally it will be justified why inequality and poverty is in an increasing rate and in what ways we could reduce it. Economic inequality and poverty To begin with, economic inequality is the basic dissimilarity that allows one individual certain decisions while denying an alternate individual those exceptionally same decisions. Economic inequality is…show more content…
First point is that a perfectly equal income distribution would be one in which each individual has the same income. For this situation, the base N% of society would dependably have N% of the income. This can be portrayed by the straight line y = x; called the "line of perfect equality. The second point is that, a perfectly unequal distribution would be one in which one individual has all the income and other people has none. All things considered, the curve would be at y = 0% for all x < 100%, and y = 100% when x = 100%. This curve is known as the "line of perfect inequality. A third way of measuring is by using the Gini coefficient which is the ratio of the area between the line of perfect equality and the observed Lorenz curve to the area between the line of perfect equality and the line of perfect inequality. The higher the coefficient, the more unequal the distribution is. In the diagram above, this is given by the ratio A/ (A+B), where A and B are the indicated areas. (Damgraad Christian, Jacob Weiner,…show more content…
According to Townsend, poor families are those whose total income fell below the poverty line plus the rent. (Towensend, 1954). Many people all across world lives with less than a dollar a day. Although many considered that such a thing is not possible and no one could survive with less than a dollar a day. In reality, many people in the sub-Saharan Africa and south Asia do live with less than a dollar per day. Timothy Besley and Robin Burgess in their article “Halving global poverty” illustrated the concept of dollar a day and defined it as poverty line chosen to be representative of domestic poverty lines found in low-income countries. (Besley, Burgess, 2003). Besley and Burgess argued that such a measure could be applied on middle income countries only, because applying it on rich countries could bias the real