Poverty line

Definition

The poverty line is the threshold used to determine the minimum income necessary to meet basic needs such as food, shelter, and clothing. This benchmark helps to identify individuals and families living in poverty, allowing for a clearer understanding of economic disparities and the effectiveness of poverty alleviation programs.

5 Must Know Facts For Your Next Test

1. The poverty line is often updated annually to reflect changes in the cost of living and inflation rates.
2. Different countries may have their own definitions and measures for the poverty line, leading to varying thresholds around the world.
3. In many countries, the poverty line is determined using the cost of a basic basket of goods necessary for survival.
4. The World Bank defines extreme poverty as living on less than $1.90 per day, which serves as a global benchmark for measuring poverty.
5. Those living below the poverty line are often eligible for government assistance programs designed to provide support and improve their living conditions.

Review Questions

• How does the poverty line help identify individuals and families living in poverty?
  • The poverty line acts as a benchmark that indicates whether a person's income is sufficient to meet basic needs like food and shelter. By establishing this threshold, governments and organizations can assess how many people fall below it, which highlights the extent of poverty within a community. This identification allows for targeted interventions and policy changes aimed at alleviating poverty and improving living conditions.
• What are some factors that influence the setting of a country's poverty line, and how can these lead to variations between countries?
  • A country's poverty line is influenced by several factors including local economic conditions, cost of living, and social norms regarding what constitutes basic needs. For instance, countries with higher costs of living will set a higher poverty line compared to those with lower costs. This leads to variations in how poverty is measured globally, making cross-country comparisons challenging due to differing standards and methodologies.
• Evaluate the effectiveness of using the multidimensional poverty index (MPI) versus the traditional income-based measure when assessing poverty levels.
  • Using the multidimensional poverty index (MPI) provides a more comprehensive understanding of poverty by examining various deprivations beyond just income, such as education and health care access. This approach highlights areas where individuals may struggle despite having an income above the traditional poverty line, revealing deeper socio-economic issues. By contrast, an income-based measure may overlook significant hardships faced by those who still manage to earn slightly above the threshold, potentially leading to insufficient policy responses. Thus, employing both methods can give a fuller picture of poverty's complexities.

Related terms

absolute poverty:

A condition where an individual or family lacks the means to meet basic life necessities, often defined by a specific income level or consumption standard.

relative poverty: A measure of poverty that considers a person's income in relation to the average income of a given area, focusing on social inequality and access to resources.

multidimensional poverty index (MPI): An index that measures poverty not just by income but also by various deprivations across multiple factors such as health, education, and living standards.