Wealth, Income & Poverty | Sociology for GCSE/IGCSE - Year 11 PDF Download

How Wealth and Income Affect Life Chances

Wealth and Income Influence Life Chances

• Wealth encompasses ownership of valuable assets like property, art, jewelry, savings accounts, and company shares. 
• It is often inherited across generations. Income, on the other hand, refers to the inflow of resources such as wages, salaries, welfare benefits, pensions, or allowances like petrol subsidies.

The Distribution of Wealth

• In Britain, wealth distribution is highly unequal, contributing to social stratification. Between July 2012 and June 2014, the wealthiest 10% of households held 45% of total wealth, while the bottom 50% owned just 9%. 
• The super-rich, typically multimillionaires, possess wealth in forms like industrial shares, finance, commerce, or inherited land, often identifying as upper-class landowners.

The Distribution of Income

• Income significantly impacts life chances, including life expectancy and access to education, housing, and healthcare. 
• Income is also unevenly distributed in the UK. In the 2014/15 financial year, the average income of the richest 20% of households before taxes and benefits was 14 times higher than that of the poorest 20%. 
• After taxes and benefits, this gap narrowed, with the richest 20% earning four times more than the poorest 20%. Redistribution through taxes and benefits helps mitigate income inequality.

The Overclass

According to Beresford (2013), an emerging "overclass" consists of extremely wealthy and influential individuals, often called "fat cats" or the "super-rich." This group is characterized by:

• Profiting from societal economic challenges.
• Leading large corporations that evade taxes or harm the environment.
• Wielding significant political and economic influence despite their small numbers.
• Having growing ties with politicians and government.

Beresford argues that this overclass shows little regard for traditional values and poses a greater societal threat than the poor and powerless underclass.

Defining and Measuring Poverty

Poverty lacks a universally accepted definition but is broadly categorized into two approaches: absolute and relative.

• Absolute Poverty: Absolute poverty occurs when income is insufficient to afford basic necessities for survival, such as food, clean water, shelter, heating, and clothing. This objective measure focuses on minimum subsistence requirements.
• Evaluation: The absolute poverty definition is useful for tracking trends over time but struggles to define what constitutes the "minimum needed to survive." For instance, debates arise over whether a basic diet should include only bread and water or also fresh fruits and vegetables.

Relative Poverty

• Relative poverty is defined by income significantly below the societal average, making individuals poor compared to others. Most UK researchers, including Townsend (1979), prefer this approach, recognizing that poverty is context-specific to time and place. 
• Relative poverty implies persistent inequality unless incomes are equally distributed. 
• It also encompasses social exclusion, where individuals are barred from participating in everyday social, economic, political, and cultural activities that most take for granted.
• The state’s chosen poverty definition shapes government acknowledgment of poverty, policy responses, and treatment of those affected.

Evaluation
Some argue that relative poverty measures inequality rather than poverty, as capitalist societies inherently have inequality. Indicators of relative poverty can be subjective, with disagreement over what constitutes a "need" (e.g., is car access essential?).

Measuring Poverty
The UK government officially measures poverty as incomes below 60% of the median income after housing costs. Alternative measures include:

• Subjective poverty: Based on individuals’ perceptions of their own poverty.
• Environmental poverty: Assessed through inadequate housing, lack of garden access, or exposure to air pollution.

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

Aim
Peter Townsend (1979) sought to quantify UK poverty levels, advocating for a relative deprivation measure over the state’s absolute standard.

Method

• Townsend employed a relative deprivation approach, surveying over 2,000 households and 6,000 individuals across various UK regions. 
• He developed a deprivation index with 60 indicators, covering diet, fuel, clothing, housing, employment, working conditions, health, education, and social activities. 
• Households were scored on this index, and Townsend identified an income threshold below which deprivation sharply increased.

Findings and Conclusions

• Townsend found that 22% of the UK population lived in poverty in 1968–1969, far exceeding the state’s absolute poverty estimate (6%) and the relative income standard (9%). 
• Vulnerable groups included elderly unskilled manual workers, children of young unskilled workers, and single-parent families.

Evaluation

Critics argue that Townsend’s deprivation index may be flawed, as some indicators (e.g., lack of fresh meat or cooked meals) could reflect lifestyle choices or religious beliefs rather than poverty. If the index is unreliable, the resulting statistics may be misleading.