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Measuring poverty

Related subjects: Citizenship; Economics

Background to the schools Wikipedia


Map of world poverty by country, showing percentage of population living on less than $1.25 per day. Unfortunately, information is missing for some countries.
World map showing Life expectancy.
World map showing the Human Development Index.



Relative poverty, in contrast, views poverty as socially defined and dependent on social context. One relative measurement would be to compare the total wealth of the poorest one-third of the population with the total wealth of richest 1% of the population. In this case, the number of people counted as poor could increase while their income rise. There are several different income inequality metrics, one example is the Gini coefficient.

The main poverty line used in the OECD and the European Union is a relative poverty measure based on "economic distance", a level of income set at 50% of the median household income.

The United States, in contrast, uses an absolute poverty measure. The US poverty line was created in 1963-64 and was based on the dollar costs of the U.S. Department of Agriculture's "economy food plan" multiplied by a factor of three. The multiplier was based on research showing that food costs then accounted for about one third of the total money income. This one-time calculation has since been annually updated for inflation.

The US line has been critiqued as being either too high or too low. For example, the Heritage Foundation, a conservative U.S. think tank, objects to the fact that, according to the U.S. Census Bureau, 46% of those defined as being in poverty in the U.S. own their own home (with the average poor person's home having three bedrooms, with one and a half baths, and a garage).. Others, such as economist Ellen Frank, argue that the poverty measure is too low as families spend much less of their total budget on food than they did when the measure was established in the 1950s. Further, federal poverty statistics do not account for the widely varying regional differences in non-food costs such as housing, transport, and utilities.

Both absolute and relative poverty measures are usually based on a person's yearly income and frequently take no account of total wealth. Some people argue that this ignores a key component of economic well-being.

The World Bank defines poverty in absolute terms. The bank defines extreme poverty as living on less than US$1.25 per day ( PPP), and moderate poverty as less than $2 a day. It has been estimated that in 2008, 1.4 billion people had consumption levels below US$1.25 a day and 2.7 billion lived on less than $2 a day. The proportion of the developing world's population living in extreme economic poverty has fallen from 28 percent in 1990 to 21 percent in 2001. Much of the improvement has occurred in East and South Asia. In Sub-Saharan Africa GDP/capita shrank with 14 percent and extreme poverty increased from 41 percent in 1981 to 46 percent in 2001. Other regions have seen little or no change. In the early 1990s the transition economies of Europe and Central Asia experienced a sharp drop in income. Poverty rates rose to 6 percent at the end of the decade before beginning to recede. There are various criticisms of these measurements.


Income inequality for the world as a whole is diminishing. A 2002 study by Xavier Sala-i-Martin finds that this is driven mainly, but not fully, by the extraordinary growth rate of the incomes of the 1.2 billion Chinese citizens. However, unless Africa achieves economic growth, then China, India, the OECD and the rest of the middle-income and rich countries will diverge away from it, and global inequality will rise. Thus, the economic growth of the African continent should be the priority of anyone concerned with decreasing global income inequality.

Poverty Gap Index The mean distance below the poverty line as a proportion of the poverty line where the mean is taken over the whole population, counting the non-poor as having zero poverty gap.


  • 800 million people go to bed hungry every day.


  • precarious livelihoods
  • excluded locations
  • gender relationships
  • problems in social relationships
  • lack of security
  • abuse by those in power
  • dis-empowering institutions
  • limited capabilities, and
  • weak community organizations.
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