Lecture 6.2

Democracy and Redistribution

Emmanuel Teitelbaum



  • Poverty–a lack of money, material possessions or means
    • Income-based approach (World Bank)
    • Capabilities approach (Amartya Sen)
  • Inequality–the unequal distribution of wealth and opportunity in a society

Measuring Poverty

  • “Headcount ratio”
    • Percentage of population below a poverty line
    • Associated with income-based approach
  • Multidimensional poverty index
    • Associated with capabilities approach
    • Measures “intensity” of poverty, not just frequency
    • Incorporates health care, education and living standards

Extreme, Moderate and Relative Poverty (Sachs)

  • Extreme poverty or “absolute poverty”
    • Cannot meet basic survival needs
  • Moderate poverty
    • Basic needs are just barely met
  • Relative poverty
    • Lack access to tools for upward social mobility
    • Applies mainly to high income countries (Sachs 2005)

Poverty Lines ($ per day 2017 PPP)

  • Extreme poverty: $2.15
  • LMIC threshold: $3.65
  • UMIC threshold: $6.85

Extreme Poverty

LMIC Threshold

UMIC Threshold

Multidimensional Poverty

U.S. Extreme Poverty


  • Go to Gapminder Dollar Street
  • Pick a family
  • Where do they fall on the poverty scale?
    • Extreme
    • Moderate
    • Relative
    • Not poor
  • What would be the biggest challenge of living like that family?

Latin America

Health Spending

Education Spending

Key Concepts

  • ISI (Import substitution industrialization)
  • Formal and informal sector workers
  • Contributory benefits, e.g. traditional pensions
  • Noncontributory benefits
    • CCT (conditional cash transfer)
    • NCP (non-contributory pensions)

Holland and Schneider

  • What is easy vs. hard redistribution?
  • What do they want to explain?
  • Competing explanations
    • Electoral competition
    • Deindustrialization
    • Partisan ideology
  • What is their explanation?
  • Come up with one good question about the reading