Poverty: Absolute vs. Relative

Concepts of Poverty

• Two main ways to think about poverty:
  1. Poverty threatening survival
  2. Poverty that sidelines or excludes from society

Resources and Absolute Poverty

• Resources refer to necessary items for survival (shelter, food, water, sanitation).
• Income Level: Used to denote minimum resources needed (e.g., living below $1 or $2 a day).
• Absolute Poverty:
  • Defined by a fixed income/resource level below which survival is threatened.
  • Fixed standard regardless of location (e.g., $1-$2/day).
  • Critique: Does not account for regional variations (e.g., higher resources needed in the Arctic for heating).
• Graph Analysis:
  • Vertical Axis: Resources
  • Horizontal Axis: Time
  • Absolute poverty line remains constant over time unless redefined.

Changes in Society and Absolute Poverty

• As median income rises in a society, fewer people live below the absolute poverty line.
• Richer societies tend to have a decrease in absolute poverty as average incomes increase.

Relative Poverty in Developed Countries

• Resource Level: Much higher than absolute poverty line (e.g., US median per person income > $80/day).
• Relative Poverty:
  • Defined as a percentage below the median income (e.g., less than 60% of median income).
  • Marker changes with country's wealth.
  • Doesn't focus on survival but on society participation.

Graph Analysis for Relative Poverty

• Relative Poverty Line:
  • Changes with median income.
  • If income rises uniformly, relative poverty line also rises.
  • Reflects exclusion from societal norms despite earning more than absolute poverty level.
• Country's Median Income Increase:
  • Absolute poverty line remains unchanged.
  • Relative poverty line tracks with median income.

Key Differences

• Absolute Poverty:
  • Universal standard.
  • Focus on survival.
• Relative Poverty:
  • Varies by country or society.
  • Focus on social inclusion.
  • Changes with economic conditions.