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- Poverty is when people lack the income and resources needed to maintain a basic standard of living.
- Basic needs include food, shelter, healthcare and education.
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- Extreme poverty where people cannot afford basic necessities for survival.
- People may be unable to afford food, clothing and shelter.
- Income is minimal and spent on survival needs.
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- A comparative measure of poverty.
- People have a lower standard of living than others in the same society.
- The poverty threshold varies between countries because average living standards differ.
Topic 5.2 - Notes and practice
CAIE IGCSE Economics: Poverty
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Types, causes, consequences and measurement
Poverty
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- Low literacy, lack of skills and poor health can make it harder to find work.
- Unemployment reduces income and may lower labour productivity.
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- Low wages reduce GDP per capita and household income.
- Low income limits consumption and investment, keeping poverty going.
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- Illness can reduce life expectancy and productivity.
- Malnutrition and untreated illness can lower a person's ability to work and earn income.
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- Poor healthcare may be caused by insufficient investment, limited access, staff shortages and too few facilities.
- If people cannot access healthcare, illness can become more severe and poverty can continue.
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- Child poverty can reduce access to education and healthcare.
- Elderly people may experience poverty if income, pensions or support are low.
- Intergenerational poverty occurs when poverty is passed from one generation to the next.
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- High population growth can create pressure on food, water, healthcare and education.
- It can also make it harder to provide enough jobs.
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- Poor infrastructure can limit trade, connectivity and economic development.
- Low foreign direct investment can limit job creation.
- High public debt can divert funds away from investment.
- Reliance on the primary sector can mean lower prices, lower profit margins and less diversification.
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- Low income can make it difficult to buy enough food.
- Malnutrition weakens the body and reduces the ability to work.
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- Poor households may not be able to afford medical care.
- Illness may go untreated, reducing life expectancy.
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- Families may be unable to afford school fees, uniforms or books.
- Low education can lead to low skills, unemployment and poverty in adulthood.
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- Low income can lead to inadequate housing or homelessness.
- Poor households may live in unsafe environments with weak access to essential services.
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- The poor may face discrimination in employment, housing and public life.
- Social exclusion can make it harder to participate in normal social and economic activity.
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- Consequences of poverty can become causes of more poverty.
- For example, poor health reduces productivity, which lowers income and keeps poverty going.
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- A poverty line is a threshold income level below which a person is considered poor.
- The source notes use $1.25 per day as the international poverty line.
- Countries may also set their own national poverty lines.
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- HDI is a composite measure used by the United Nations.
- It includes life expectancy, years of schooling and GNI per capita.
- The score runs from 0 to 1; higher scores indicate higher development.
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- GDP per capita measures average income but does not show income distribution.
- The Gini coefficient measures income inequality.
- The Multidimensional Poverty Index can include several dimensions of deprivation.
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Poverty definition
Poverty is when people lack the income and resources needed to maintain a basic standard of living, including food, shelter, healthcare and education.
income
resources
standard of living
basic needs
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Poverty is when people lack the _____ and _____ needed to maintain a basic standard of living.
Absolute poverty
Absolute poverty is extreme poverty where people cannot afford basic necessities for survival such as food, clothing and shelter.
The source notes use the World Bank poverty line of $1.25 per day.
Minimal income
Spent on basics
Hunger and malnutrition
Homelessness
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Relative poverty
Relative poverty means having a lower standard of living compared with others in the same society.
A poverty line in Singapore may be much higher than in Sierra Leone because average incomes and living standards differ.
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Match each term to its explanation.
Relative poverty compares living standards within the same _____.
Unemployment
Low literacy / lack of skills / poor health
Unemployment
Low labour productivity
Low income
Poverty
Do not only write unemployment causes poverty. Explain the mechanism that links unemployment to low income and lower living standards.
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Low wages
Low wages
Low GDP per capita
Limited consumption
Limited investment
Poverty persists
1 / 1
Illness
Malnutrition and untreated illness
Reduced productivity
Lower income
Poverty
1 / 2
Poor healthcare
If people cannot access healthcare, illness can become more severe, reducing productivity and income.
- Insufficient investment in healthcare.
- Shortage of medical personnel.
- Lack of healthcare facilities.
1 / 2
Match each term to its explanation.
Age
Children growing up in poor households may have weaker access to education and healthcare, making poverty more likely in adulthood.
1 / 2
High population growth
- Insufficient resources can hinder development.
- Limited job opportunities can increase unemployment.
1 / 1
High population growth can lead to insufficient _____ and limited _____ opportunities.
Other development barriers
- Poor infrastructure reduces connectivity and trade.
- Low FDI limits investment and job creation.
- High public debt reduces funds available for development.
- Reliance on primary products can limit diversification.
Match each term to its explanation.
Hunger and malnutrition
Low income
Not enough food
Malnutrition
Lower productivity
Poverty continues
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Ill health and mortality
Poverty can lead to untreated illness, higher mortality and lower life expectancy.
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Limited access to education
Cannot afford education
Low skills
Unemployment or low wages
Intergenerational poverty
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Social exclusion
Social exclusion means being cut off from normal social and economic participation, often through discrimination and lack of access.
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Poverty trap
A poverty trap occurs when the effects of poverty make it harder to escape poverty.
1 / 1
Match each term to its explanation.
Poverty line
A poverty line is a threshold income level used to decide whether a person is poor.
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Human Development Index
- Life expectancy: health.
- Years of schooling: education.
- GNI per capita: standard of living.
1 / 2
Match each term to its explanation.
Other measures
GDP per capita is an average. It may hide inequality, so a country can have high average income but still have poverty.
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Quick check
True / False
Poverty means lacking the income and resources needed to maintain a basic standard of living.
Relative poverty is measured by comparing people with others in the same society.
Absolute poverty focuses only on inequality within a high-income country.
Low wages can limit consumption and investment, helping poverty continue.
HDI includes life expectancy, education and GNI per capita.
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