Introduction

Poverty can be defined in many different ways. Some attempt to reduce it to numbers,
while others argue that a more ambiguous definition must be used. In the end, a
combination of both methods is best. Today, most economists and social workers use two
ways to define poverty.

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Social Definitions of Poverty

Multimedia:
See a worker breaking bricks (video) for a rural road. The job pays just under $1 per day.

Note: Requires Windows Media Player.

Some people describe poverty as a lack of essential items – such as food, clothing, water,
and shelter – needed for proper living. At the UN’s World Summit on Social
Development, the ‘Copenhagen Declaration’ described poverty as “…a condition
characterised by severe deprivation of basic human needs, including food, safe drinking
water, sanitation facilities, health, shelter, education and information.” When people are
unable to eat, go to school, or have any access to health care, then they can be considered
to be in poverty, regardless of their income. To measure poverty in any statistical way,
however, more rigid definitions must be used.

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Statistical Definitions of Poverty

A Bengali carpenter working. Poor workers in developing countries can lead very
insecure lives - a single unforseen event can drive them into poverty.

While there are various numerically defined methods to measure and quantify poverty,
two are simple enough that they are often used to define poverty (other methods are
examined in the Measuring Poverty I and Measuring Poverty II sections of this site),
relative poverty measurement and absolute poverty measurement. Both are based on
income or consumption values making gathering information to compile statistics on
poverty much easier.

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Relative Poverty
Slideshow:
A Journey Through Poverty: View photos and read observations about poverty from a
team member who traveled in Bangladesh, a developing nation in Southeast Asia.

Note: Requires Flash Player.

Relative poverty measures are the simplest ways to determine the extent of poverty in
individual countries. Using this method, the entire population is ranked in order of
income per capita. The bottom 10% (or whatever percentage the government chooses to
use) is then considered ‘poor’ or ‘impoverished.’ This can be fine for country-wide
measurements, but it has some major drawbacks in global use. If, say, a 10% relative
poverty measurement was applied in a global setting, it would appear that both an
industrialized country, such as the U.S., and a sub-Saharan African country had the same
10% poverty rate, even though the conditions of the poor in sub-Saharan Africa are much
worse than conditions in the U.S. For this reason, absolute poverty measures are more
often used to define poverty on a global scale.

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Income vs. Consumption

A worker breaks bricks to make gravel for use on a road - the job pays around $1 per
day.

Before absolute poverty measures can be used to define poverty, researchers must first
determine if they want to measure income amounts or consumption amounts. Income
refers to the amount of money someone makes, while consumption refers to the monetary
value of the goods that person actually consumes. If you earn $4 a day, but are able,
through other means, to consume $5 a day, then your yearly income would be $1,440, but
your yearly consumption would only be $1,860. The differences can be significant,
because depending on their situation poor people may be able to get goods for less. While
it might appear at first glance that income and consumption are the same, closer
examination reveals that income is just one factor, albeit a large one, which determines
consumption amounts.

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Absolute Poverty
Absolute poverty measures set a ‘poverty line’ at a certain income amount or
consumption amount per year, based on the estimated value of a ‘basket of goods’ (food,
shelter, water, etc.) necessary for proper living. For example, if $5 a day is determined to
be the income poverty line in a country, then anyone with an income of less than $1860
would be considered impoverished. If instead a poverty line based on consumption was
used, anyone consuming goods with a monetary value of less than $1860 would be in
poverty.

Many impoverished people engage in agricultural jobs. Some are 'subsistence farmers,'
and are barely able to produce enough food to stay alive.

The most commonly used definition of global poverty is the absolute poverty line set by
the World Bank. Poverty is set at an income of $2 a day or less, and extreme poverty is
set at $1 a day or less. This line was first created in 1990 when the World Bank published
its World Development Report and found that most developing countries set their poverty
lines at $1 a day. The $2 mark was created for developing nations with slightly better
income levels than their $1 a day counterparts. More developed countries are permitted to
set their poverty lines elsewhere (it would be silly to assume a statistically significant
group of people in the U.S. made less than $1 a day, though there are obviously many
impoverished people living there). For highly industrialized countries, such as Britain,
Japan, and the U.S., the absolute poverty line is usually set higher (for example, the line
has been set at $14.40 in the past). The 2005 poverty line for single individuals in the
United States is set at $26.19 a day.

Note:
In reality, the current ‘$1 a day’ poverty line is $1.08 (the ‘$2 a day’ line is $2.15) in
1993 U.S. dollars, adjusted for Purchasing Power Parity. Read More...

As of 2001, 1.1 billion people, or 21% of the 2001 world population, had incomes less
than the World Bank’s ‘$1 a day’ line for extreme poverty. 2.7 billion people had
incomes less than the World Bank’s ‘$2 a day’ line for poverty. While this is a decline
from past years (in 1981, there were 1.5 billion people in extreme poverty), it still means
that almost one-half of the world’s population lives in poverty, mainly in sub-Saharan
African and South Asia.

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Empowerment
Kathleen McHugh on Poverty:
"Poverty should be defined by an individual's inability to affect change in their lives..." -
Kathleen McHugh, 'Save the Children'

One other factor many experts on poverty talk about when they talk about defining
poverty is empowerment. 'Empowerment' refers to the ability of an individual to make
choices regarding his or her life. Often, the poor are not empowered - they are forced to
work at certain jobs or do certain things, and often, this state of existence can be linked to
poverty. When people are disempowered, many times, they are in poverty.

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Sources
2005 HHS Poverty Guidelines

Bell, Peter. Telephone Interview. 19 December 2005.

Gilbert, Geoffry. World Poverty. Santa Barbara: ABC-CLIO 2004

Reddy, Sanjay G. How Not to Count the Poor. Columbia University, 2005.

McHugh, Kathleen. Telephone Interview. 5 January 2006.

UN World Summit on Social Development

U.S. Census Bureau Small Area Income & Poverty Estimates

Wikipedia: Poverty

Wikipedia: Poverty Line

Wikipedia: Purchasing Power Parity

World Bank: PovertyNet: Overview

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Different people think about poverty in different ways. Some people think that poverty
is about being able to buy and sell but other people think about getting a fair share of
education and health care or about being given respect, and having some influence
over what happens in their life. Because of these differences it is useful to think about
two main types of poverty - income poverty and non-income poverty
Income poverty
happens when a
household takes in less
than one US dollar per
day. This means that
people will not have
enough food or
medicine and they will
have poor clothes and
houses. Income poverty
is due to people not
having access to money
or other assets. If
people do not have any
other assets like land to
grow their own food,
then income poverty can
result in stunted growth
and early death.

The best way to reduce

income poverty is to
encourage and support
the development of
effective businesses
(small, medium and
large) which make good
use of our natural
resources and talents to
create wealth and jobs
Non income poverty happens when people may have a little bit of money but
otherwise the quality of their life is not good. They do not have access to affordable
social and physical services (schooling, health care, medicines, safe water, good
sanitation, good transport) and they may not feel safe in their homes either because
they cannot trust the authorities or because they belong to some particularly
vulnerable group

The best way to reduce non-income poverty it to make sure that people have access
to affordable and good quality social services and infrastructure, that they feel secure
in their homes, that they trust the authorities and, if they are vulnerable, that there are
safety net programmes to protect them

Condition where people's basic needs for food, clothing, and shelter are not being met.
Poverty is generally of two types: (1) Absolute poverty is synonymous with destitution
and occurs when people cannot obtain adequate resources (measured in terms of calories
or nutrition) to support a minimum level of physical health. Absolute poverty means
about the same everywhere, and can be eradicated as demonstrated by some countries. (2)
Relative poverty occurs when people do not enjoy a certain minimum level of living
standards as determined by a government (and enjoyed by the bulk of the population) that
vary from country to country, sometimes within the same country. Relative poverty
occurs everywhere, is said to be increasing, and may never be eradicated