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Theory & Causes of Poverty
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Theory & Causes of
Poverty
05/01/2018
Amina Ikpefua
Types of Causes of Poverty
Types of Causes of Poverty
A. Individual
Poverty is explained by individual circumstances and/or characteristics of poor people. Some examples are:
• amount of education, skill, experience, intelligence.
• health, handicaps, age.
• work orientation, time horizon, culture of poverty.
• discrimination, together with race, sex, etc.
Types of Causes of Poverty
Types of Causes of Poverty
B. Aggregate
There are two types of aggregate poverty theory: case and generic. There is no agreement on which is the correct explanation of most poverty.
1. Case. Add up all poverty explained by individual theories, and that is equal to total or aggregate poverty. In other words, according to case theories of poverty, individual and aggregate explanations are really the same. According to these theories, aggregate poverty is just the sum of individual poverty.
2. Generic. Poverty is explained by general, economy-wide problems, such as
• inadequate non-poverty employment opportunities
• inadequate overall demand (macro problems, macro policy)
• low national income (Less Developed Country)
If generic theories are correct, poverty is caused by one set of forces (general, economy-wide problems) but distributed according to individual theories.
Case vs. Generic Theories of Poverty
Case V. Generic Theories
of Poverty
A. What difference does it make whether poverty is caused by case or generic causes?
Answer: It makes a lot of difference.
Example #1: Suppose somehow we significantly reduce racial discrimination. Will total poverty fall?
Case answer: Yes.
Generic answer: No. Poverty will only be redistributed.
Example #2: Suppose we give poor people effective skill training and compensatory education. Will total poverty fall?
Case answer: Yes.
Generic answer: No. Poverty will only be redistributed.
B. What can you do about poverty?
1. If case theories are correct: Address the individual cause of poverty. For example, if poverty is caused by inadequate skills or education, then the solution is skill training or compensatory education. If poverty is caused by discrimination, then the solution is anti-discrimination policies.
2. If generic theories are correct: Improve the quantity and quality of jobs.
C. How can you tell which is correct–case or generic theories?
1. Remember that the things that cause poverty in case theories explain its distribution in generic theories. Because of this, both theories are consistent with the same facts (statistics). Therefore, it is very difficult, maybe impossible, to determine which is correct through direct test.
2. There’s some indirect evidence pointing to generic theories: For example, there is the failure of poverty to fall during periods of large training programs, and the failure of poverty to fall with rise in general educational level of population. Further indirect evidence later on in the course.
3. Most people assume case theories are correct. Why?
Micro experience (fallacy of composition — assuming that what’s true of the part must be true of the whole).
Poverty scholars study the poor instead of the economy.
Antipoverty policy would be too hard (expensive) if generic theories were true.
Blaming the victim.
A desire to help the poor. (P.S. If generic theories are true, how can you help the poor?)
Acute causes of poverty
Acute causes of poverty
Warfare: The material and human destruction caused by warfare is a major development problem. For example, from 1990 to 1993, the period encompassing Desert Storm, per capita GDP in Iraq fell from $3500 to $761. The drop in average income, while a striking representation of the drop in the well-being of the average Iraqi citizen in the aftermath of the war, fails to capture the broader affects of damages to the infrastructure and social services, such as health care and access to clean water.
Agricultural Cycles
People who rely on fruits and vegetables that they produce for household food consumption (subsistence farmers) often go through cycles of relative abundance and scarcity. For many families that rely on subsistence production for survival, the period immediately prior to harvest is a ‘hungry period.’ During these periods of scarcity, many families lack sufficient resources to meet their minimal nutritional needs. Being familiar with these cycles has enabled development practitioners to anticipate and prepare for periods of acute need for assistance.
Droughts and Flooding
Besides the immediate destruction caused by natural events such as hurricanes, environmental forces often cause acute periods of crisis by destroying crops and animals.
Natural Disasters
Natural disasters such as hurricanes and earthquakes have devastated communities throughout the world. Developing countries often suffer much more extensive and acute crises at the hands of natural disasters, because limited resources inhibit the construction of adequate housing, infrastructure, and mechanisms for responding to crises.
Sources
https://sowkassignments.wordpress.com/required-readings/why-are-people-poor/theory-and-causes-of-poverty/
Sources