Absolute poverty and relative poverty

Meaning of poverty

Poverty is defined as “a state of not having enough money to take care of basic needs such as food, clothing, and shelter” according to the Encarta online dictionary. We can even go for a more complex definition such as “a situation or a state where a society or an individual found themselves in a harsh condition of lacking financial and social resources to meet the daily life human needs and to absolve shocks that may happen in a society”.

But to make it simple, poverty simply means being too poor.

Absolute poverty

Absolute poverty refers to being below a certain income threshold or the number of people living below a certain income threshold ($1 per day). In this situation, people are unable to afford certain basic goods and services. $1 per day is considered as the absolute poverty line.

Relative poverty

Relative poverty refers to those who have inadequate income compared to the general income level of the society. That means those under relative poverty are poorer than the average people. Therefore they may not be able to afford many desirable goods and services even though basic necessities are fulfilled.

Next topic: Policies to alleviate poverty