Absolute And Relative Poverty
Definition
Absolute poverty: being unable to afford the minimum goods needed to survive, measured against a fixed subsistence line.
Relative poverty: having an income far below the typical standard of one's own society, measured against median income.
Two Poverty Lines
- Absolute poverty is measured against a fixed subsistence line, such as living on less than £2.15 a day.
- Relative poverty is measured against a society's median income, such as an income below 60% of the median.
- Absolute poverty can in principle be eliminated as incomes rise above subsistence.
- Relative poverty persists as long as income is unequally distributed, because the line moves with the median.
Key Differences
- Absolute poverty uses a fixed threshold, while relative poverty moves with average living standards.
- A country can grow much richer and still have widespread relative poverty.
Example
- Median monthly income is £2,000, so the relative poverty line is 60% × £2,000 = £1,200.
- Someone earning £1,000 is below that line and so is in relative poverty.
- The absolute line may be far lower, so the same person may not be in absolute poverty.
- If all incomes double to a £4,000 median, the absolute count falls but the relative line rises to 60% × £4,000 = £2,400.
- So relative poverty can persist even as absolute poverty is falling.
Causes
- Poverty is driven by unemployment, low wages, poor health and education, and a lack of assets.
- These causes can trap households in poverty across generations.
Why It Matters
- Absolute poverty focuses on survival and development, while relative poverty focuses on inclusion and inequality.
- Which measure a government targets is partly a value judgement, so the priority depends on a country's level of development and social goals.
Exam technique
- Quote a concrete threshold for each measure to show precise understanding.
- Explain why growth can cut absolute poverty yet leave relative poverty unchanged.
- Link relative poverty back to the distribution of income.
Common Mistake
- Do not treat absolute and relative poverty as the same measure.
- Do not say economic growth automatically ends relative poverty.
- Do not confuse poverty, which is about income, with inequality, which is about the spread.
Self review
- Define absolute and relative poverty.
- How is a relative poverty line usually set?
- Why can relative poverty persist after strong economic growth?
- State two causes of poverty.
