Poverty and Inequality Essay Example | Topics and Well Written Essays - 2750 words

Poverty and Inequality - Essay Example Contemporary scholars of poverty offer a different approach towards understanding poverty. In contemporary view, poverty is multidimensional and it is not dependent on income alone, rather it depends on lack of capabilities, deprivation or lack of resources and other important aspects such as security, rights and freedoms. Most traditional scholars depended on the traditional method of indexing poverty levels but the contemporary view has been helpful in giving clearer methods of dealing with poverty. Multidimensional study of poverty may take on the objective and subjective references in measurement of data. Measurement may also be dependent on the relative and absolute approaches in the references. In this discourse, several indices applying the latter and former methods will be under application in determining poverty and inequality. In order to calculate inequality, however, one has to understand what inequality means in an economic perspective in relation to poverty. In any given population, there is a difference between what people within the population earn. The uneven distribution of income in any given population is income inequality. In order for there to be income, there has to be several sources of income. These sources of income may be combinational or independent per person receiving the income. Income may result from wages, rent, bank account interests, salaries or even profits made in business transactions ( Stiglitz, 2012). In order to understand the complexities of economic inequality, the best specimen to use for the study is a family. In the study, the family’s income is under analysis, and then the family members ranked from the lowest income earner to the highest income earner. After the ranking, the incomes aid in establishing a Lorenz curve that is important in analysis of income. In order for a