Absolute and Relative Poverty | tutor2u Economics
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Absolute and Relative Poverty

  • Levels: AS, A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

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

Difference between Absolute and Relative Poverty

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.

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