Wealth, Poverty and Welfare

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Wealth and Income


Wealth -

  •  Wealth is the value of all your possessions e.g. house, car, land and shares
  •  Marketable wealth is things you can sell e.g. land
  •  Non-marketable wealth is things you can't sell e.g. pensions


Income -

  •  Income is funds that an individual receives on a monthly/annually basis e.g. salary, benefits and pension
  •  Household disposable income steadily increased since early 1980s - indicates everyone is getting richer to some extent
  •  Gap between rich and poor widened in recent years
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Social trends

·        Social trends (social groups) -

  • Households where adults are unemployed are most likely to have an income below 60% of the median
  •  In 2001, 22% of pensioners lived in households with incomes less than 60% of the median


Social trends (ethnicity) -

  • Ethnic minority households are more likely than people in white households to be in the lowest earning category
  •  White, afro-caribbean and Indian households are pretty much equally likely to be the highest earners
  •  64% of Pakistani and Bangladeshi households are in the lowest earning category
  • White and afro-caribbean households are fairly well spread across all income groups 



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Absolute poverty - 1


 Absolute poverty -

  • Can't afford basics - food, warmth and shelter

Drewnowski and Scott 1966:

  • studied poverty in absolute terms - devised a "level of living index" which worked out the income needed for basic needs, adding cultural needs to the list 
  • however, it is debatable whether or not cultural needs e.g. TV should be included in a study of absolute poverty
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Absolute poverty - 2

  •  Rowntree 1899: measured absolute poverty - made a list of essentials for life and recorded how many families could afford them , those whose income was too low were classed as in poverty - found 33% of York's population were in poverty
  • Critisms of Rowntree's study: his definition of poverty didn't allow for any wasted food and assumed the cheapest options were always available, also his list didn't match the York lifestyle
  • Rowntree listened to critics and did two further studies in 1941 and 1951, adding to his list - by this time more people could afford what was on his list and he concluded that poverty was disappearing fast in 20th century Britain
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Absolute poverty - 3


Bradshaw 1990 -

  •  Studied the spending patterns of the least wealthy and used those patterns to calculate and adequate budget - anyone earning less than the budget was classed as "poor"
  •  The main difference between Bradshaw's and Rowntree's studies were Bradshaw studied how people actually spent their money whereas Rowntree assumed that if people earnt more than the usual total cost of essential items then they weren't poor
  •  Bradshaw's test gives clear and unambiguous statistics that are easy to compare between different studies
  •  Critics have argued that Bradshaw set a very low 'adequate budget', so his conclusions are not a true reflection of deprivation in society


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Relative poverty - 1


  Relative poverty -

  •  Whether or not an individual is rich or poor in comparison to other people in society

Townsend 1979 -

  •  Devised a 'deprivation index' - a list of 60 things central to life in the UK - included social activities (e.g. inviting people over for meals) and possessions (e.g. having a fridge)
  •  From his list of 60, he selected 12 that he thought were equally essential to the whole population
  •  He then gave each household a deprivation score based on whether or not they had the items on his shortlist
  •  His statistics indicate that the deprivation score went up rapidly after the wealth dropped below a certain threshold (150% of the 1979 basic supplementary benefit a.k.a income support)
  •  He classified all households that earnt below the threshold as "suffering from poverty
  • Using his measure, he calculated that 22.9% of the population were suffering from relative poverty

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Relative poverty - 2

  •  Piachaud 1987: argued that Townsend's deprivation index is too subjective and culturally biased, classing cooked breakfasts and Sunday joints as central to British life
  •  Wedderburn: criticised Townsend's method for creating the deprivation index - she argued that he should have carried out research into the customary behaviour of people in society - it seemed to her that he picked items based on his own cultural opinions
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Relative poverty - 3

·        Mack and Lansley 1985 -

  • Defined poverty to be "an enforced lack of socially perceived necessities"
  •  Used a survey to determine which items to include on their list of perceived necessities - asked for the public's opinion - any items that were classified as essential by over 50% of the respondents were added to their list (ended up with a list of 22 items)
  •  Surveyed households to find out which essentials they lacked - households could answer; they had an item, want an item, wanted but can't afford an item or don't want an item - only those who said they wanted but couldn't afford an item were considered to be deprived - Mack and Lansley argued that their figures would only reflect involuntary deprivation
  •  If a household lacked three or more items from the list then they were classed as poor
  •  They reported that 14% of the population were living in poverty in 1983 - when they repeated the study in 1990, they found that the figure had risen to 21%
  •  A more recent study by Gordon et al (2000) found that 24% of the population were living in poverty in 1999 according to the test set by Mack and Lansley
  •  Mack and Lansley's study have been criticised because the 1990 survey and the 1983 survey didn't produce the same list of essentials so their results are not directly compatible
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Pros and cons of defining poverty absolutely

·        Advantages of defining poverty absolutely -

à Always measured on the same scale, no matter what group you are looking at - makes it easier to compare statistics between groups

à Gives a better idea of the standard life in developed countries, where people who are relatively poor may still have more than enough wealth to meet their basic needs

·        Disadvantages of defining poverty absolutely -

à Means making assumptions about people's basic needs

à Assumes that everyone has the same basic needs - disregards information about occupation, gender, age and culture that might be relevant to deciding someone's basic needs

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Pros and cons of defining poverty relatively


Advantages of defining poverty relatively -

  •  Takes into account people's expectations and their subjective quality of their lives
  •  Gives a more realistic picture of the relative deprivation that is caused by inequalities in society


Disadvantages of defining poverty relatively -

  •  As long as there is differences between people in society, some of them will appear to be "poor" in a relative poverty study
  • If the rich are getting richer more quickly than the poor are getting richer, then relative poverty will increase even though the lives of the poor are improving
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Victim blaming theories

  •  Spencer (19th century sociologist) said the poor were those in society who had failed to do the best for themselves - suggested they were immoral, lazy and more interested in alcohol than an honest day's work
  • Spencer said the state shouldn't intervene to help the poor because the poor are a useful example to others not to follow that way of life
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Functionalist persepctive

  •  Some people are richer/poorer than others because society functions that way
  •  Argue that as society develops they have to find ways to allocate people to suitable roles and jobs - the most important jobs need to be the most rewarding to motivate intelligent people to train and qualify for them
  •  Criticised because they assume the best jobs are allocated based on talent when in reality discrimination by social class, age, ethnicity and gender often influences who gets the top jobs
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Webarian prospective

  •  Say that the distribution of wealth and income is based on market situation
  •  An individual's market situation is how valuable their skills are for society and how scarce their skills are - it's about supply and demand of skills, high demand for your skills makes them worth more
  • Say that poor people have poor market situation
  •  There isn't always the same demand for the same skills - the same people don't always have the best market situation, meaning there's always some movement of wealth in society
  •  Individuals compete to improve their market situation - powerful people e.g. judges, CEOs and politicians can do the most to keep themselves in a good market situation
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Marxist perspective

  • Say that the social groups which have low levels of wealth and income are the ones which are powerless in society
  •  According to Marx; capitalism thrives on inequality of income - if there were equal distribution of wealth there wouldn't be any profit for the capitalists - they need profit to keep up their power in society
  •  Say exploitation is an essential part of capitalism - and inequalities in wealth and income are a central part of that exploitation
  •  Marx predicted that as capitalism develops, more oppression of the proletariat is needed - Marists say the current widening gap between rich and poor is evidence of this 
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Gap between the rich and the poor

  • Went down in 1970s under the Labour government - benefits given to the poor went up and taxes paid by the rich were very high
  •  Gap widened in 1980s under the conservative government - top rate of tax went down so the rich kept more of their earnings - taxes that everyone paid (e.g. VAT and fuel tax) went up - the economy did well, so rich people earned more money on their investments - benefits went down
  • Adonis and Pollard 1997: reported that the gap continued to widen in the 1990s - in addition to the policies introduced during the 1980s, they identified the increase in private education as a factor affecting wealth distribution
  •  An Office of National Statistics report by Penny Babb (2004) based on the 2001 census suggested that the gap between rich and poor continued to grow under New Labour
  •  There has been an increase in the number of single parent households - they tend to have less money and this means statistics show more poorer households
  • More two earner households - income is measured by household, so a household with two people in good jobs in relatively rich, contributing to the statistics showing an increase in rich households
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Social groups at risk of poverty - 1

  • Women - in 1992, there were 5.2 million women living in poverty in the UK, compared to the 4.2 million men
  •  Older people - in 1992, 32% of households where the main adult was over 60 were poor
  •  Single parents - in 1992, 58% of single parents had an income of less than half the average
  •  Disabled people - in 1996, 47% of disabled people had an income of less than half the average
  •  Ethnic minorities - in 1997, the Policy Studies Institute said that overall UK ethnic minorities are more likely to be poor - Pakistani and Bangladeshi households are more likely to have low income
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Social groups at risk of poverty - 2

  • Women tend to be poorer than men partly because they are more likely to be single parents than men - working mums are more likely to be in part-time jobs that fit in with childcare, but they pay less
  •  Older people tend to be poorer because they're retired - some retired people only get basic state pension
  •  Single-parent families tend to be poorer because it's hard to get good work and look after children at the same time
  •  Disabled people face discrimination in the job market - along with people who have a long-term illness preventing them from working, live on incapacity benefits and disability benefit, which means they have a fixed, relatively low income
  • Some ethnic minorities tend to be richer/poorer than others - there's a variation in the level of income within ethnic minority groups
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