Study Notes

Absolute Poverty - 2021 Revision Update

AS, A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 11 Jan 2021

The concept of absolute or extreme poverty is explained and applied in this updated revision video.

Absolute Poverty - 2021 Revision Update

What is absolute poverty?

When a household does not have sufficient income to sustain even a basic acceptable standard of living and to meet people’s essential, core needs. Absolute poverty is also known as extreme poverty.

The World Bank defines poverty in absolute terms. The bank defines extreme poverty as living on less than US$1.90 per day. (PPP), and moderate poverty as less than $3.10 a day (PPP)

Absolute poverty thresholds vary between developed and developing countries

World Bank’s three extreme poverty lines:

(1) Percentage of population living below $1.90 a day (PPP)

(2) Percentage of population living below $3.20 a day (PPP)

(3) Percentage of population living below $5.50 a day (PPP)

Extreme poverty is multi-dimensional – it is about much more than living on a very low income per capita.

The World Bank Group’s goals are to end extreme poverty and promote shared prosperity

Reducing extreme poverty is the first of the world’s Sustainable Development Goals.

In 2017 according to the World Bank, low-income economies contrib­uted 0.8 percent of global GDP in PPP terms despite accounting for nearly 8 percent of the world’s population.

According to data from the World Bank, extreme poverty is declining but perhaps not quickly enough to meet one of the sustainable development goals of lowering absolute poverty to less than 3% of the global population by 2030.

The percentage of people living in extreme poverty globally fell to a low of 8.6 percent in 2018 — down from 11 percent in 2013. The number of people living on less than $1.90 a day fell during this period by 68 million to 736 million.

The World Bank predicts COVID19 could push more than 100 million people into extreme poverty.

This is the worst setback in global poverty reduction in a generation.

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