How the Other Half Live

1. Absolute Poverty
Also known as extreme poverty or abject poverty, it involves the scarcity of basic food, clean water, health, shelter, education and
information. Those who belong to absolute poverty tend to struggle to live and experience a lot of child deaths from preventable
diseases like malaria, cholera and water-contamination related diseases.
2. Relative Poverty
It is defined from the social perspective that is living standard compared to the economic standards of population living in
surroundings. Hence it is a measure of income inequality. For example, a family can be considered poor if it cannot afford
vacations, or cannot buy presents for children at Christmas, or cannot send its young to the university.
3. Situational Poverty
It is a temporary type of poverty based on occurrence of an adverse event like environmental disaster, job loss and severe health
problem. People can help themselves even with a small assistance, as the poverty comes because of unfortunate event.
4. Generational Poverty
It is handed over to individual and families from one generation to the one. This is more complicated as there is no escape
because the people are trapped in its cause and unable to access the tools required to get out of it.
5. Rural Poverty
It occurs in rural areas with population below 50,000. It is the area where there are less job opportunities, less access to services,
less support for disabilities and quality education opportunities. People are tending to live mostly on the farming and other menial
work available to the surroundings.
6. Urban Poverty
It occurs in the metropolitan areas with population over 50,000. These are some major challenges faced by the Urban Poor:
• Limited access to health and education.
• Inadequate housing and services.
• Violent and unhealthy environment because of overcrowding.
• Little or no social protection mechanism.
Subsistence Economy
An economic system wholly reliant on the self provisioning of the community. Wealth in a subsistence economy is measured
in terms of natural resources. A subsistence economy relies on hunting and cultivation for food and surrounding trees for building
shelter depending on the natural environment's renewal and reproduction for survival.
Development
The process of improving the quality of all human lives and capabilities by raising people’s levels of living, self-esteem, and
freedom.
Developing Countries
Countries of Asia, Africa, the Middle East, Latin America, eastern Europe, and the former Soviet Union that are presently
characterized by low levels of living and other development deficits. Used in the development literature as a synonym for less
developed countries.
Economics and Development Studies
Adam Smith
 First development economist
 Published in 1776 his "Wealth of Nations", the first treatise on economic development.
The Nature of Development Economics
1. Traditional Economics
An approach to economics that emphasizes utility, profit maximization, market efficiency, and determination of equilibrium.
2. Political Economy
It is concerned with the relationship between politics and economics, with a special emphasis on the role of power in economic
decision making.
3. Development Economics
The study of how economies are transformed from stagnation to growth and from low-income to high-income status, and
overcome problems of absolute poverty.
The Important Role of Values in Development Economics
The very concepts of economic development and modernization represent implicit as well as explicit value premises about
desirable goals for achieving what Mahatma Gandhi once called the “realization of the human potential.”
Economies as Social Systems
Economics and economic systems must be analyzed within the context of the overall social system of a country and, indeed,
within an international, global context as well.
Social System
The organizational and institutional structure of a society including its values, attitudes, power structure, and traditions.
What Do We Mean by Development?
Traditional Economic Measures Achieving sustained rates of growth of income per capita to enable a nation to expand its
output at a rate faster than the growth rate of its population.
GNI per capita - rate of inflation
The New Economic View of Development 1970, reduction or elimination of poverty, inequality, and unemployment 1980 and
1990 GNI growth rates turned negative for many developing countries
Amartya Sen’s “Capability” Approach argues that the “capability to function” is what really matters for status as a poor or
nonpoor person. It is the characteristics of the consumer that makes up the commodities.
Five sources of disparity real incomes and actual advantage - Sen
1. Personal Heterogeneities
2. Environmental Diversities
3. Variations in Social Climate
4. Distribution within the family
5. Differences in relational perspectives
“well-being” means being well. -Sen
Development and Happiness
Happiness is part of human well-being, and greater happiness may in itself expand an individual’s capability to function.
Happiness Science
Seven factors that surveys show affect average national happiness:
 Family relationships  Health
 Financial situation  Personal freedom
 Work  Personal values.
 Community and friends
Three Core Values of Development
Sustenance - The basic goods and services
Self-esteem - The feeling of worthiness that a society enjoys
Freedom - A situation in which a society has at its disposal a variety of alternatives from which to satisfy its wants
The Central Role of Women
 women tend to be poorer than men
 more deprived in health and education and in freedoms in all its forms.
 primary responsibility for child rearing
 mothers tend to spend a significantly higher fraction of income under their control for the benefit of their children than
fathers do
 Women also transmit values to the next generation
 a society must empower and invest in its women.
The Three Objectives of Development
 To increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health, and
protection
 To raise levels of living, including, in addition to higher incomes, the provision of more jobs, better education, and greater
attention to cultural and human values, all of which will serve not only to enhance material wellbeing but also to generate
greater individual and national self-esteem
 To expand the range of economic and social choices available to individuals and nations by freeing them from servitude
and dependence, not only in relation to other people and nation-states, but also to the forces of ignorance and human
misery
The Future of the Millienium Development
A set of eight goals adopted by the United Nations in 2000: to eradicate extreme poverty and hunger; achieve universal
primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat
HIV/AIDS, malaria, and other diseases; ensure environmental sustainability; and develop a global partnership for development.
The goals are assigned specific targets to be achieved by 2015
The MDGs were developed in consultation with the developing countries, to ensure that they addressed their most pressing
problems. In addition, key international agencies, including the United Nations, the World Bank, the International Monetary Fund
(IMF), the Organization for Economic Cooperation and Development (OECD), and the World Trade Organization (WTO), all
helped develop the Millennium Goals Declaration.
However, the MDGs have also come in for some criticism: MDG targets were not ambitious enough The goals were not
prioritized The setting of 2015 as an end date for the targets could discourage rather than encourage further development
assistance if it were not met.
5th Part Sustainable Development Goals (SDGs)
1. Leave no one behind—to move “from reducing to ending extreme poverty, in all its forms;” in particular, to “design goals
that focus on reaching excluded groups.”
2. Put sustainable development at the core, “to integrate the social, economic, and environmental dimensions of sustainability.”
3. Transform economies for jobs and inclusive growth, while moving to sustainable patterns of work and life.
4. Build peace and effective, open, and accountable institutions for all, which “encourage the rule of law, property rights,
freedom of speech and the media, open political choice, access to justice, and accountable government and public
institutions.”
5. Forge a new global partnership so that each priority should involve governments and also others, including people living in
poverty, civil society and indigenous and local communities, multilateral institutions, business, academia, and philanthropy.