Absolute and Relative Poverty

The World Bank recently defined the new absolute poverty line as the percentage of the population of country living on less than $1.90 a day (PPP) at constant 2011 prices. Relative poverty is defined in relation to the overall distribution of income or consumption in a country

Absolute poverty:

• When a household does not have sufficient income to sustain even a basic acceptable standard of living / meet basic needs
• Absolute poverty thresholds will vary between developed and developing countries
• The extreme poverty measure now used by the World Bank is the percentage of the population living on less than $1.90 a day (PPP)

Relative poverty

• A level of household income that is considerably lower than the median level of income within a country
• The official UK relative poverty line is household disposable income (adjusted for household size) of less than 60% of median income

The official poverty line:
An income level that is considered minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs, and so on.