Poverty line

Poverty Line

The concept of the "poverty line" is a critical measure used globally to determine the minimum level of income deemed adequate in a particular country. It is a threshold below which individuals or families are considered to be living in poverty. The poverty line is used by governments and organizations to identify and assist those in need, and to develop policies aimed at poverty alleviation.

Definition

The poverty line is defined as the minimum level of income necessary to achieve an adequate standard of living in a given country. This standard of living typically includes basic needs such as food, clothing, shelter, and healthcare. The poverty line can vary significantly between countries and even within regions of a country, depending on the cost of living and societal norms.

Calculation

The calculation of the poverty line can be complex and involves several methodologies:

• Absolute Poverty Line: This is a fixed threshold based on the cost of a basket of essential goods and services. It is often used in developing countries and is adjusted for inflation over time.

• Relative Poverty Line: This is defined in relation to the overall distribution of income or consumption in a society. For example, the poverty line might be set at 50% of the median income.

• International Poverty Line: The World Bank sets an international poverty line, which is currently set at $1.90 per day (as of 2021) in purchasing power parity (PPP) terms. This line is used to compare poverty levels across countries.

Importance

The poverty line is crucial for several reasons:

• Policy Development: It helps governments and organizations to develop targeted policies and programs to reduce poverty.

• Resource Allocation: It aids in the allocation of resources to those most in need.

• Monitoring and Evaluation: It provides a benchmark for monitoring and evaluating the effectiveness of poverty reduction strategies.

Criticisms

Despite its widespread use, the poverty line has been criticized for several reasons:

• Arbitrariness: The choice of what constitutes basic needs can be arbitrary and may not reflect the true cost of living.

• Exclusion of Non-Income Factors: The poverty line often does not account for non-income factors such as access to education, healthcare, and social services.

• Regional Variations: A single poverty line may not accurately reflect the cost of living in different regions within a country.

Global Context

Globally, the poverty line is used to track progress towards international goals such as the United Nations' Sustainable Development Goals (SDGs), particularly Goal 1: No Poverty. The World Bank and other international organizations use the poverty line to assess and compare poverty levels across countries.

Also see

• Poverty
• Income inequality
• Living wage
• Cost of living
• Purchasing power parity