What is the fundamental definition of a poverty threshold?

The poverty threshold, also known as the poverty limit, poverty line, or breadline, is defined as the minimum level of income deemed adequate to live in a specific country or place. This threshold is generally determined by estimating the total annual cost of essential necessities for an average adult.

How does the cost of housing influence the poverty line calculation?

The cost of housing, such as the rent for an apartment, typically constitutes the largest portion of the estimated necessities for the poverty line. Consequently, economists monitor the real estate market and other housing cost indicators as significant factors influencing the poverty line's calculation.

How does the perception of the poverty line differ between developed and developing countries?

In practice, the official or commonly understood poverty line is considerably higher in developed countries compared to developing countries, reflecting the differing standards of living and economic conditions.

Who is credited with popularizing the concept of a 'poverty line' in Britain, and what was his methodology?

Charles Booth, a social reformer, popularized the concept of a poverty line through his investigations in London at the turn of the 20th century. He set the line at 10 to 20 shillings per week, considering it the minimum necessary for a family of four or five to subsist.

What contribution did Seebohm Rowntree make to the understanding of poverty lines?

Seebohm Rowntree, a British sociological researcher, surveyed families in York and defined a poverty line based on the minimum weekly sum required to secure the necessaries for a healthy life, including food, clothing, rent, and household items. He calculated this based on the cheapest prices for minimum caloric and nutritional intake.

What distinction did Rowntree make regarding different types of poverty?

Rowntree distinguished between 'primary poverty,' which occurs when a household lacks sufficient income to meet basic needs, and 'secondary poverty,' where a household has adequate income but spends it on non-essential items, thus failing to meet basic needs.

Who developed the poverty threshold in the United States, and what was their method?

Mollie Orshansky developed the poverty threshold in the United States between 1963 and 1964. Her method involved taking the cost of a food plan for a family and multiplying it by a factor of three, attributing the threshold as a measure of income inadequacy.

What is the World Bank's current International Poverty Line (IPL) for extreme poverty?

As of September 2022, the World Bank's International Poverty Line, representing a global absolute minimum, is set at $2.15 per day in Purchasing Power Parity (PPP). This figure is used to measure extreme poverty worldwide.

What are the other IPL thresholds set by the World Bank as of 2022 for different income country groups?

In addition to the $2.15 per day threshold for extreme poverty, the World Bank also uses $3.65 per day in PPP for lower-middle income countries and $6.85 per day in PPP for upper-middle income countries.

How has the global population living in absolute poverty changed over time according to UN estimates?

According to United Nations estimates, the percentage of the global population living in absolute poverty (using the $1.90/day standard) decreased significantly from over 80% in 1800 to 10% by 2015. However, approximately 734 million people still remained in absolute poverty as of 2015.

What is the significance of the $1.90 per day IPL figure based on 2011 PPP?

The $1.90 per day figure, based on International Comparison Program (ICP) PPP calculations, represents the international equivalent of what $1.90 could purchase in the US in 2011. Most scholars agree this figure better reflects current realities, especially new price levels in developing countries.

What criticism has been raised regarding the World Bank's IPL figures for extreme poverty?

Peter Edward of Newcastle University has argued that the World Bank's IPL figures are artificially low, suggesting that the real number as of 2015 was closer to $7.40 per day.

What challenge exists in using a single monetary poverty threshold globally, and how has Robert C. Allen attempted to address it?

Using a single monetary poverty threshold globally is problematic due to difficulties in comparing prices between countries. Robert C. Allen proposed a solution by using standardized baskets of goods typical for the poor, such as the cheapest local grain, to better reflect purchasing power across different economies and time periods.

What is the basic needs approach to measuring poverty?

The basic needs approach is a method used primarily in developing countries to measure absolute poverty by defining the minimum resources necessary for long-term physical well-being, typically in terms of consumption goods. The poverty line is then set as the income required to meet these needs.

When was the basic needs approach introduced, and by whom?

The basic needs approach was introduced in 1976 by the International Labour Organization's World Employment Conference, which endorsed the satisfaction of basic human needs as a primary objective of development policy.

What are the traditional immediate basic needs identified in poverty discussions?

Traditionally, the immediate basic needs are identified as food (including water), shelter, and clothing. Many modern lists also include sanitation, education, and healthcare.

How does a 1995 UN declaration define absolute poverty?

According to a UN declaration from the World Summit on Social Development in Copenhagen (1995), absolute poverty is defined as a condition of severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information, emphasizing that it depends on both income and access to services.

According to David Gordon's definition, what constitutes absolute poverty?

David Gordon's paper defines absolute poverty as the absence of any two of eight specific basic needs, which include food (measured by Body Mass Index), safe drinking water, sanitation facilities, health treatment, adequate shelter, education, access to information, and access to services.

What criticisms were leveled against the basic needs approach in 1978?

In 1978, critics argued that the basic needs approach lacked scientific rigor, was overly consumption-oriented, anti-growth, and potentially misleading by suggesting poverty elimination was too easy.

How is relative poverty defined in terms of income comparison?

Relative poverty is defined as having a low income in comparison to others within the same country, often set at a threshold like below 60% of the median income.

What assumption underlies the measurement of relative poverty?

The measurement of relative poverty is based on the assumption that whether someone is considered poor depends on their income relative to the income shares of others in the same economy, taking the social and economic environment into account.

How does relative poverty relate to social exclusion?

Relative poverty can lead to social exclusion, impacting individuals' access to opportunities such as decent housing, education, or employment, even if their basic needs are met.

Which international organizations commonly use the relative poverty measure?

The United Nations Development Program (UNDP), UNICEF, the Organisation for Economic Co-operation and Development (OECD), and Canadian poverty researchers commonly use the relative poverty measure.

What is the primary relative poverty line used by the EU and OECD?

The main poverty line used by the European Union and the OECD is based on 'economic distance,' typically set at 60% of the median household income.

What was Adam Smith's perspective on poverty in 1776 regarding societal norms?

In 1776, Adam Smith argued that poverty is characterized by the inability to afford not only essential life necessities but also those things that societal custom deems necessary for respectable people, even of the lowest order.

How did John Kenneth Galbraith define poverty in 1958 in relation to community standards?

John Kenneth Galbraith defined poverty in 1958 as a state where an individual's income, even if sufficient for survival, falls markedly behind that of their community.

What was the US Republican view on defining poverty in 1964 regarding its variability?

In 1964, a joint committee report indicated that Republicans endorsed the concept of relative poverty, stating that no objective definition exists and that the definition varies with time and place, rising with the general standard of living.

What argument did Victor Fuchs make in 1967 regarding the definition of relative poverty?

American economist Victor Fuchs first proposed in 1967 that poverty be defined as any family earning less than half the median family income, which is how the relative poverty rate is typically computed today.

What was Peter Townsend's definition of poverty published in 1979?

In 1979, Peter Townsend defined poverty as a condition where individuals lack the resources to obtain the diet, participate in the activities, and maintain the living conditions and amenities that are customary or widely approved in their societies.

How does the concept of 'moderate poverty' relate to relative poverty?

The term 'relative poverty' can also refer to 'moderate poverty,' which describes a standard of living or income level that is sufficient to meet basic needs but is still significantly lower than that of the majority in the population.

Why might the term 'poverty' be considered misleading when applied solely to relative poverty?

Some argue that using 'poverty' for relative poverty is misleading because it primarily measures inequality. For instance, if everyone's income doubled, the relative poverty rate would remain unchanged, despite no absolute improvement in living standards for the poor relative to the rich.

What is a 'living income' as defined by the Living Income Community of Practice?

A living income is defined as the net annual income required for a household to afford a decent standard of living in their specific location, encompassing food, water, housing, education, healthcare, transport, clothing, and provisions for unexpected events.

How does a living income differ from a poverty line?

The key distinction between a living income and a poverty line is the concept of 'decency,' where a living income aims for people to thrive rather than merely survive, covering a broader range of needs and aspirations beyond basic survival.

Why is an accurate poverty measure important for policymakers and development strategies?

An accurate poverty measure is crucial for policymakers to effectively allocate assistance, determine program efficacy, and guide development strategies. It also helps keep the issue of poverty on the political and moral agenda.

What is a primary challenge in accurately measuring poverty due to data collection methods?

A primary challenge is that much poverty data is collected through interviews, relying on reported income, which may not accurately reflect the true situation or account for illegally earned income.

Why might even accurate poverty data not fully represent living standards or economic position?

Even if data is accurate, it may not fully represent a family's or household's living standards, well-being, or economic position, as poverty measures are inherently imperfect and require subjective social judgments.

How do varying national poverty lines affect comparability between countries?

National poverty lines are often not comparable because definitions vary considerably among nations, with richer countries generally employing more generous standards than poorer ones, and even among rich countries, standards differ greatly.

What was Poland's extreme poverty threshold for single-person households in late 2019?

In Poland, the extreme poverty threshold for single-person households in the fourth quarter of 2019 was set at 614 Polish złoty per month, which equated to approximately 20.17 złoty per day.

What was the estimated percentage of UK employees paid below the 'real living wage' in 2021?

In 2021, it was reported that almost 5 million jobs, or about one in six nationally, paid below the real living wage in the UK.

How did the COVID-19 pandemic impact the percentage of UK jobs paid below the National Minimum Wage?

The COVID-19 pandemic was connected to an increase in the percentage of jobs paid below the National Minimum Wage, rising from 1.4% in 2019 to 7.4% in 2020, before decreasing to 3.8% in 2021.

What were India's official poverty thresholds for urban and rural dwellers around 2005?

In 2005, India's official poverty line for urban dwellers was set at less than 538.60 rupees per month (approximately US$12), while for rural dwellers, it was less than 356.35 rupees per month (approximately US$7.50).

What scale of poverty reduction has India achieved in a decade?

India lifted approximately 271 million people out of poverty between 2005/06 and 2015/16. During 2018, the World Poverty Clock indicated that close to 44 Indians escaped extreme poverty every minute.

What is the situation regarding an official poverty line in Singapore, and why?

Singapore does not have an official poverty line. The Minister for Social and Family Development argued that establishing one might not accurately capture the scope of poverty and could lead to missed opportunities for aid for those just above the line.

What were the US poverty thresholds for a single person and a family of four in 2020?

In 2020, the US poverty threshold for a single person under 65 was an annual income of $12,760 (about $35 per day). For a family of four with two children, the threshold was $26,200 annually (about $72 per day).

How does the US Census Bureau's poverty line calculation address cost-of-living variations between states?

The US Census Bureau calculates the poverty line uniformly across the entire US, irrespective of the varying cost-of-living differences between states or urban areas, which can lead to inaccuracies in representing poverty levels in high-cost regions.

What is the 'supplemental poverty measure' used by the US Census Bureau?

The supplemental poverty measure is a calculation used by the Census Bureau that factors in housing costs. In 2017, this measure indicated that California had the highest poverty rate in the country when housing costs were included.

How do government transfers, such as SNAP, impact the overall poverty rate in the US?

Government transfers, including SNAP (food stamps) and housing subsidies, are included in household income calculations. Studies suggest that without these social support programs, the poverty rate in the US would be significantly higher, estimated at 30% to 40% above the official poverty line.

How are women and children disproportionately affected by poverty in the US compared to men?

Women and children are more likely to be impacted by poverty, particularly when part of single-mother families. The poverty rate for women (13.8%) exceeds the overall average (12.3%) and is higher than men's (11.1%), making them 21.6% more likely to fall into poverty.

Which minority groups in the US experience higher poverty rates according to statistics?

According to US poverty statistics, Black Americans (21%), foreign-born non-citizens (19%), Hispanic Americans (18%), and adults with disabilities (25%) face higher poverty rates. These groups collectively account for 85% of individuals below the poverty line in the US, while White Americans have a poverty rate of 8.7%.

What are the significant educational impacts of living below the poverty threshold on children?

Children living below the poverty threshold are more likely to experience psychological stress affecting academic performance, have poorer health outcomes that hinder education, drop out of school, perform worse academically, have lower graduation rates, and encounter more disciplinary issues. Schools in impoverished communities often receive less funding, further disadvantaging their students.

How does the Federal Poverty Level (FPL) influence healthcare access in the US?

The FPL, derived from the poverty threshold, is used as an eligibility criterion for federal programs like Medicaid and the Children's Health Insurance Program. Eligibility for these essential healthcare services is directly contingent on an individual's or family's income relative to the FPL.

Poverty Threshold Wiki: The Measure of Need: Understanding Global Poverty Thresholds

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Overview

Defining the Threshold

The poverty threshold, often referred to as the poverty line or breadline, represents the minimum income level deemed adequate for an individual or household within a specific country or region. This benchmark is typically established by calculating the aggregate cost of essential necessities for a year, with housing costs often constituting the largest component. These thresholds are subject to annual adjustments to reflect economic changes.

Global vs. National Standards

A critical distinction exists between global and national poverty measures. While developed nations generally employ more generous standards reflecting higher costs of living and societal expectations, developing countries often utilize significantly lower thresholds. This disparity highlights the contextual nature of poverty measurement, influenced by local economic conditions and societal norms.

Key International Figures

The World Bank sets an International Poverty Line (IPL) to standardize global poverty assessment. As of September 2022, this line was updated to $2.15 per day (in Purchasing Power Parity - PPP). Additional benchmarks exist for lower-middle-income countries ($3.65/day PPP) and upper-middle-income countries ($6.85/day PPP), reflecting varying economic capacities.

Historical Context

Early Conceptualizations

The concept of a "poverty line" gained prominence through the work of social investigators like Charles Booth in London at the turn of the 20th century. Booth's studies, alongside those of Seebohm Rowntree in York, established early methodologies for defining poverty based on minimum income required for subsistence, considering essential needs like food, shelter, and clothing.

The Orshansky Threshold

In the United States, the foundational poverty threshold was developed by Mollie Orshansky in the mid-1960s. Her approach involved assessing the cost of a minimal food plan and multiplying it by a factor of three, reflecting the proportion of income typically spent on food. This methodology, with subsequent adjustments for inflation, formed the basis of the official US poverty measure for decades.

Absolute Poverty

Global Standard Definition

Absolute poverty, often equated with extreme poverty, signifies the absence of sufficient resources to meet fundamental life necessities. The World Bank's International Poverty Line (IPL) serves as a global benchmark, currently set at $2.15 per day (PPP) as of September 2022. This measure aims to provide a consistent standard for assessing poverty across diverse global contexts.

The IPL has evolved, with previous figures including $1.25 (2005 PPP) and $1.90 (2011 PPP). Notably, some analyses, such as that by Peter Edward, suggest a significantly higher 'real' poverty line, estimating it at $7.40 per day as of 2015, underscoring the complexities of global comparability.

Global trends indicate a substantial reduction in extreme poverty, falling from over 80% in 1800 to approximately 10% by 2015. However, applying a single monetary threshold worldwide presents challenges due to variations in Purchasing Power Parity (PPP) calculations and the unsuitability of standard PPP baskets for accurately reflecting the consumption patterns of the poorest populations.

Basic Needs Approach

Defining Essential Resources

The basic needs approach, particularly relevant for developing countries, defines poverty as the lack of essential resources for physical well-being. This framework typically includes food, safe water, sanitation, shelter, healthcare, education, and information. It emphasizes access to services as a critical component, not solely income.

David Gordon's framework identifies eight key basic needs, defining absolute poverty as the absence of any two of these:

Food: Body mass index must be above 16.
Safe drinking water: Available nearby (fewer than 15 minutes' walk).
Sanitation facilities: Toilets or latrines accessible in or near the home.
Health: Treatment received for serious illnesses and pregnancy.
Shelter: Homes with fewer than four people per room; floors not soil, mud, or clay.
Education: Ability to read and attend school.
Information: Access to newspapers, radios, televisions, computers, or telephones at home.
Access to services: (Indicates a comprehensive range of education, health, legal, social, and financial services).

This approach has faced criticism for its potential to oversimplify poverty and for lacking scientific rigor, with alternative perspectives like Amartya Sen's focus on 'capabilities' offering different conceptualizations.

Living Income Concept

Beyond Survival

The concept of a living income extends beyond mere survival, defining the net annual income required for a household to afford a decent standard of living. This includes not only basic necessities but also provisions for unexpected events and participation in customary social activities, reflecting a focus on well-being and dignity.

Dynamic Measurement

Calculating a living income is complex and context-specific, necessitating regular adjustments for inflation and local economic shifts. Unlike static poverty lines, living income benchmarks aim to reflect the evolving cost of a decent life, acknowledging that standards of living and societal expectations change over time.

National Poverty Lines

United States Context

In the U.S., poverty thresholds are updated annually by the Census Bureau for statistical purposes and used to determine eligibility for various federal programs, including Medicaid. For 2020, the threshold for a single person was approximately $35 per day. However, the official line is often criticized as being substantially lower than the actual cost of basic needs, particularly when factoring in regional cost-of-living variations.

India's Approach

India differentiates poverty lines for urban and rural populations. As of 2005 data, the urban threshold was approximately $12 per month, while the rural threshold was around $7.50 per month. While poverty rates have declined significantly, these figures illustrate the disparities in measurement based on location.

United Kingdom Standards

The UK's approach often focuses on relative measures, such as a percentage of median earnings. In 2021, it was reported that approximately 5 million jobs (one in six) paid below the real living wage, highlighting concerns about low pay and its impact on living standards, even for those employed.

Poland's Threshold

According to Statistics Poland, the proportion of the population living below the national extreme poverty threshold was 4.2% in 2019. For a single-person household, this threshold was set at approximately 614 zloty per month, equating to roughly $5.21 per day at the time.

Iran's Economic Reality

In Iran, economic challenges, including high inflation, have impacted poverty levels. As of August 2022, the official poverty line was reported at 10 million tomans per month, while the minimum wage was set at 5 million tomans, indicating a significant gap between earnings and basic subsistence needs.

Singapore's Perspective

Singapore does not maintain an official poverty line, with government officials suggesting it might not accurately capture the scope of issues faced by the poor and could inadvertently exclude those just above the line from receiving aid. This approach prioritizes targeted support over a fixed numerical threshold.

Relevance and Policy

Guiding Policy Decisions

Accurate and relevant poverty measures are crucial for effective policymaking. They inform the allocation of social assistance, guide the development of anti-poverty strategies, and enable the evaluation of program effectiveness. Without robust measurement, efforts to alleviate poverty risk being misdirected or insufficient.

Moral and Political Imperative

Beyond empirical data, poverty measurement carries significant moral and political weight. It keeps the issue of poverty on the public agenda, framing it as a societal concern that requires collective action. The choice of measurement methodology itself involves value judgments about what constitutes an acceptable standard of living.

Methodological Limitations

Data Accuracy and Scope

Poverty data collection often relies on self-reported income, which can be subject to inaccuracies or omissions, particularly concerning illegal earnings or informal economic activities. Furthermore, income alone may not fully capture an individual's or household's overall well-being or economic position.

The Challenge of Relativity

Measures of relative poverty, while reflecting societal inequality, can be misleading if solely interpreted as poverty. If everyone's income doubles, relative poverty metrics may show no change, even if absolute living standards improve. This highlights the need for a nuanced understanding of different measurement approaches.

Global Comparability Issues

Comparing poverty across nations is inherently difficult due to significant variations in the cost of living and the composition of essential goods baskets. While PPP adjustments attempt to mitigate this, they may not accurately reflect the consumption patterns of the poorest populations, leading to potential inaccuracies in global poverty estimates.

Impacts of Poverty

Educational Attainment

Living below the poverty threshold can significantly impede educational outcomes. The psychological stress associated with poverty, coupled with potential health issues and underfunded educational resources in low-income communities, can lead to lower academic performance, higher dropout rates, and increased disciplinary problems.

Healthcare Access and Outcomes

Poverty is strongly correlated with reduced access to healthcare. Eligibility for programs like Medicaid is often tied to poverty thresholds, influencing individuals' ability to secure essential medical services. Disparities in health insurance coverage and access to primary care are often observed between those living below and above poverty lines.

Dynamics and Mobility

Poverty is not always a static condition. Individuals and families can move in and out of poverty over their lifetimes. Government transfers and social assistance programs play a crucial role in mitigating poverty, with many recipients transitioning off these programs within a few years, indicating a dynamic relationship between income support and economic stability.

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References

Ravallion, Martin Poverty freak: A Guide to Concepts and Methods. Living Standards Measurement Papers, The World

Poverty Lines â Martin Ravallion, in The New Palgrave Dictionary of Economics, 2nd Edition, London: Palgrave Macmillan

Hagenaars, Aldi & de Vos, Klaas The Definition and Measurement of Poverty. Journal of Human Resources, 1988

Hagenaars, Aldi & van Praag, Bernard A Synthesis of Poverty Line Definitions. Review of Income and Wealth, 1985

Ravallion, Martin; Chen Shaohua & Sangraula, Prem Dollar a day The World Bank Economic Review, 23, 2, 2009, pp. 163â84

Guidance manual on calculating and visualizing the income gap to a Living Income Benchmark Prepared for the Living Income Community of Practice The Committee on Sustainability Assessment (COSA) and KIT Royal Tropical Institute July 2020

"http://inequalitywatch.eu/spip.php?article99" Eurostat 2010

A full list of references for this article are available at the Poverty threshold Wikipedia page

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Disclaimer

Important Notice

This content has been generated by an Artificial Intelligence model and is intended for informational and educational purposes only. It is based on data sourced from Wikipedia and may not reflect the most current information or provide a comprehensive global perspective.

This is not financial or policy advice. The information presented here should not be considered a substitute for professional consultation with economists, sociologists, or policy experts. Always refer to official sources and consult qualified professionals for specific guidance related to poverty measurement, economic policy, or social welfare.

The creators of this page are not responsible for any errors or omissions, or for any actions taken based on the information provided herein.

The Measure of Need

💡 Dive in with Flashcard Learning! 💡

Overview 🌍

📏 Defining the Threshold

⚖️ Global vs. National Standards

📊 Key International Figures

Historical Context ⏳

📜 Early Conceptualizations

🇺🇸 The Orshansky Threshold

Absolute Poverty ⚖️

🌍 Global Standard Definition

Basic Needs Approach 🏠

📦 Defining Essential Resources

Living Income Concept 💰

✨ Beyond Survival

🔄 Dynamic Measurement

National Poverty Lines 🗺️

🇺🇸 United States Context

🇮🇳 India's Approach

🇬🇧 United Kingdom Standards

🇵🇱 Poland's Threshold

🇮🇷 Iran's Economic Reality

🇸🇬 Singapore's Perspective

Relevance and Policy 💡

🏛️ Guiding Policy Decisions

⚖️ Moral and Political Imperative

Methodological Limitations ❓

📊 Data Accuracy and Scope

🔄 The Challenge of Relativity

🌍 Global Comparability Issues

Impacts of Poverty 📈

🎓 Educational Attainment

🏥 Healthcare Access and Outcomes

🔄 Dynamics and Mobility

Teacher's Corner 🧑‍🏫

Edit and Print this course in the Wiki2Web Teacher Studio

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❓ Test Your Knowledge! ❓

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References

📜 References

Feedback & Support 👍

To report an issue with this page, or to find out ways to support the mission, please click here.

Disclaimer ⚠️

📜 Important Notice

Dive in with Flashcard Learning!

Overview

Defining the Threshold

Global vs. National Standards

Key International Figures

Historical Context

Early Conceptualizations

The Orshansky Threshold

Absolute Poverty

Global Standard Definition

Basic Needs Approach

Defining Essential Resources

Living Income Concept

Beyond Survival

Dynamic Measurement

National Poverty Lines

United States Context

India's Approach

United Kingdom Standards

Poland's Threshold

Iran's Economic Reality

Singapore's Perspective

Relevance and Policy

Guiding Policy Decisions

Moral and Political Imperative

Methodological Limitations

Data Accuracy and Scope

The Challenge of Relativity

Global Comparability Issues

Impacts of Poverty

Educational Attainment

Healthcare Access and Outcomes

Dynamics and Mobility

Teacher's Corner

True or False?

Test Your Knowledge!

Gamer's Corner

Discover other topics to study!

References

Feedback & Support

Disclaimer

Important Notice