Practice question · True or false
Because there will always be a bottom to any income distribution, the relative poverty rate cannot be reduced.
Hints
- The threshold is a fraction of the median, not a fixed percentile of the distribution.
- Ask what happens if the lower half of the distribution is compressed towards the middle.
Show the answer
False
Why
False, and the reasoning confuses a proportion with a percentile. Compressing the lower half of the distribution towards the median moves households above 60 per cent of it, and several European countries have measurably reduced their rates. What relative poverty cannot register is everyone becoming richer together.
Practise Inequality, Poverty and Social Exclusion
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