Wealth, Income & Poverty (AQA GCSE Sociology)

How wealth and income affect life chances

• Wealth and income influence life chances

  • Wealth refers to the ownership of assets that are valuable, such as property, art and jewellery

  • Wealth also includes money in savings accounts and shares in companies

  • Wealth is passed down the generations through inheritance

  • Income refers to the flow of resources that individuals and households receive, such as cash from wages or petrol allowance

  • Other sources of income include salaries, welfare benefits and pensions

The distribution of wealth

• Stratification involves the unequal distribution of wealth and income in Britain

  • Wealth is distributed more unevenly than income

  • Between July 2012 and June 2014, the wealthiest 10% of households in Britain owned 45% of overall wealth

    • Contrastingly, the bottom 50% owned only 9% of overall wealth

• The super-rich are multimillionaires who:

  • own wealth in the forms of shares in industry, finance and commerce

  • are upper-class landowners who inherited their wealth

The distribution of income

• Income is linked to life chances, life expectancy and access to education, housing and health services

  • Like wealth, income is distributed unevenly between households in the UK

  • During the 2014/15 financial year, the average income of the richest 20% of households before benefits and taxes was 14 times greater than that of the poorest 20%

• One way of redistributing income is through taxes and benefits

  • By doing this, the income of the richest 20% was only 4 times greater than that of the poorest 20%

The overclass

• Beresford (2013) identifies an emerging 'overclass'

  • They are the very rich and powerful, also known as the 'fat cats' and 'super-rich'

• This new group appears to:

  • profit from economic problems in society

  • be among the leaders of huge corporations that avoid paying tax and those that damage the environment

  • be small but holds power and influence in political and economic terms

• There are increasing links between the overclass, politicians and government

• Beresford argues that the very rich and powerful overclass appears to:

  • show little commitment to traditional values

  • be more of a threat to society than the poor and powerless underclass

Defining and measuring poverty

• There is no single agreed way of defining poverty, but there are two broad approaches

  • Absolute approach

  • Relative approach

Absolute poverty

• People experience absolute poverty when their income is not enough to obtain the minimum they need to survive

  • For example, they do not have access to basics such as food, clean water, shelter, heating and clothing

  • Their income is so low they can barely survive

• This definition is useful as it allows researchers to measure trends over time

• However, it is difficult to determine what the 'minimum needed to survive' is

  • For example, is bread and water enough to survive on, or should a basic diet include fresh fruit and vegetables

Relative poverty

• People experience relative poverty when their income is well below average, so they are poor compared to others in society

• Most researchers in the UK use the relative definition of poverty

• This approach recognises that what is considered to be poverty is relative to place and time

  • This means that we will always find poverty in a society unless incomes are distributed equally

• Poverty can include social exclusion, which refers to being shut out from everyday activities, such as society's social, economic, political and cultural life

• In this case, poverty is not just about low incomes but about excluding people from activities that most people take for granted

• The definition of poverty chosen by the state is important because it determines:

  • how far the government accepts that poverty exists

  • what policies are adopted to tackle poverty

  • how those experiencing poverty are treated

Measuring poverty

• There are different ways of measuring poverty

• The official UK government measure is in terms of low incomes

  • Low incomes are those below 60% of the median income of the population after housing costs

• Other ways of measuring poverty and subjective and environmental poverty:

  • Subjective poverty is based on whether people see themselves as living in poverty

  • Environmental poverty measures deprivation in terms of inadequate housing, lack of a garden and air pollution

Key thinker: Townsend (1979): Poverty in the UK

Aim

• Peter Townsend (1979) aimed to determine how many people were living in poverty in the UK

Method

• Townsend used his relative deprivation definition of poverty to measure the extent of poverty in the UK

• His research was based on questionnaires issued to over 2,000 households and more than 6,000 individuals located in various geographical areas in the UK

• He devised a deprivation index to measure relative deprivation

  • This covered many variables, including diet, fuel, clothing, housing conditions, working conditions, health, education and social activities

• Each household was given a score on this deprivation index

• Townsend calculated a threshold for levels of income below which the amount of deprivation rapidly increased

Findings and conclusions

• Townsend calculated that more than 22% of the population were living in poverty in 1968–1969

• This proportion was much higher than that based on the state standard of poverty, which suggested that just over 6% were living in poverty

• His calculation was also higher than the relative income standard of poverty, which was 9%

• He also identified particular groups of people who were at risk of poverty, such as:

  • elderly people who had worked in unskilled manual jobs

  • children in families of young unskilled manual workers or in one-parent families

Evaluation

• Townsend’s methods and conclusions have been criticised by those who argue that his index was inadequate and produced potentially misleading results

  • For example, the absence of fresh meat and cooked meals might not be an indicator of poverty but of individual choice or religious belief

• If the index is inadequate, then the statistics based on it will also be questioned