Poverty and Inequality

What is Poverty and Inequality?

Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains Poverty and Inequality. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.

Check that you can explain Poverty and Inequality in your own words and give one example from everyday life. If you can do that, you have understood the core idea.

Understanding Poverty and Inequality helps you read the news critically and weigh up policies, choices and arguments about society.

Poverty and Inequality in detail

Absolute poverty means being unable to afford basic needs such as food, shelter and clean water, while relative poverty means having a much lower income than most people in society, such as below 60% of the median income. Inequality is the unequal distribution of income and wealth, measured by tools like the Gini coefficient.

Causes include unemployment, low wages, lack of education, ill health, discrimination, conflict and unequal access to resources. Effects include poorer health and education and social tension. Policies include progressive taxes, a minimum wage, benefits, education and development aid. How much inequality is acceptable is debated.

How the interactive helps you understand Poverty and Inequality

Watch the bar chart in the interactive. Use any sliders or buttons it offers to change the values and see how the bar chart responds.

Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of Poverty and Inequality.

Real-life uses and examples

• Use Poverty and Inequality to weigh up the pros and costs of a policy or decision.
• Explain Poverty and Inequality to a classmate using a choice you make yourself, such as spending pocket money.
• Give a balanced answer about Poverty and Inequality by considering more than one point of view.

Common mistakes to avoid

• Confusing a short-term effect with a long-term one.
• Giving an opinion without evidence or a clear economic or civic reason.
• Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.