Poverty - Video Tutorials & Practice Problems

Poverty

So what constitutes as poor? Let's go ahead and discuss this topic of poverty in this video. So the poverty line is a level of income set by the government. Okay, this poverty line is going to be some sort of threshold. The government's gonna say if you if your family is making any money below this threshold, right? They're gonna say this is an amount of money if you're making less than that while you're living in poverty. Okay that's the poverty line. And this poverty line, it's gonna depend on the size of the household. You can imagine that the poverty line for someone living by themselves is going to be lower than a poverty line for say a four person or six person household. Okay. So it depends on that size of the household and in 2017 just for an example, the poverty line for a four person household Here in the US was 24,300. Okay, so that was the poverty line set by the government for a four person household. Anyone earning less than this amount would be considered to be in poverty. Okay, so the poverty rate. Well this is the percentage of the population that is living in poverty. Okay, so this is important stuff when we come to economics. Now, we're starting to blend the line between microeconomics and macroeconomics here. Right. Aren't we talking about some big picture stuff, this kind of almost falls on your mat macro economics, but they touch upon this in your textbooks. All right, so let's go ahead and check this out. We've got a couple graphs here just to show kind of the history of poverty we've seen here in the US. So you can notice it it goes down these great areas here on the graph, those were recessions, those uh, times where we were in a recession. And you can see that it's changed over time. And as the time of this graph, there was approximately 43 million people living in poverty, which was about 13.5% of our nation. All right. So, let's talk about some of this data. Well, first of all this data about poverty, we're talking about the income, right? We're talking about the income that these families get, but it doesn't include all sources of income. Okay, there's some things that are excluded and we call these uh in kind transfers. So, right here in kind transfers. These are programs that provide goods and services. So this is like food stamps or health care rather than cash right there getting services rather than cash. Okay, So they're still getting essentially income, right? Because this food or these this health care. These are things they would have to pay for if they weren't poor. Right? So in essence, it's a source of income, but it's not included in this calculation of poverty here. Okay, so let's talk about some of the significant trends associated with poverty. First, we see that poverty is correlated with race. Okay, we talked about discrimination in other videos. This is gonna go hand in hand with that. We see that blacks and Hispanics are three times more likely to live in poverty than whites. Poverty is also correlated with age with Children. We see that Children are going to be more likely to be members of poor poor families than the elderly. Okay. And last we see that poverty is correlated with family composition. So generally we see that families headed by a single female, so there's no spouse, just a single female and her kids, they are five times more likely to be living in poverty. Okay, so these are some of the trends that we see with poverty and another big factor here is that the conditions of poverty are unfortunately self reinforcing. We say, okay, so this is basically the idea that it causes poor people to stay poor. We call this the poverty trap, It's the mechanisms of the society that cause poor people to stay poor. Okay, they have trouble getting out of this poverty. One of the reasons is a credit constraint they have trouble getting loans from banks because since they're poor, the bank sees them as a higher risk and doesn't want to lend them money even if they they're capable of paying it back. So they have trouble getting loans. So you can imagine that's going to make it tough and generally we see that poor families, these poor neighborhoods usually have schools with lower funding and then these poor Children are gonna attend worse schools with the low funding and they're gonna have lower human capital, right? Remember that this human capital, this is the education and training that leads to higher wages. It makes them more productive. And there, unfortunately, in a situation where they they're stuck, where they can't go to a good school and they can't get that education just because of the conditions they were born in. So since they were born poor, they end up going to this worse school and getting a worse education, making them worse off in the future. Right? So it kind of just it's a it's a cyclical kind of thing and it's super unfortunate. Alright, so let's go ahead and move on to the next page where we'll discuss some some more about poverty. All right, let's do that now.