Absolute and Relative Poverty

Absolute and Relative Poverty

In development economics you will spend a lot of time thinking about poverty and how to alleviate it. Yet the term poverty is often very ambiguous and conditioned by our own personal experiences. (My idea of poverty changed considerably after living in Thailand for a year.). Therefore it important to some anchor for what we mean by the word poverty.

Generally in economics we split poverty down into two types. Relative and Absolute poverty.
A common definition of absolute poverty is someone who is unable to meet their basic physiological needs – food, shelter, housing etc.

A nice quote to describe absolute poverty is the following:

‘ a condition of life so degraded by disease, illiteracy, malnutrition, and squalor as to deny its victims basic human necessities … life at the very margin of physical existence.’ (Sen)

Relative poverty is often defined as when most of you needs are met but very few of your wants. I.e. have housing and food but you have them at only the most basic level, any form of luxury is likely to be beyond you.
Relative poverty also can have technical definitions, often when a household’s income is a certain % of the average household income for that country. So in the UK poverty is defined as a household where income are 60% of the Median income. (Roughly £11,000) These technical defintions will vary between countries.

A few key questions you will want to consider with regard to relative and absolute povetry are the following:
– What is the difference between absolute and relative poverty
– What are the main economic causes of absolute and relative poverty
– What are the economic consequence of absolute povetry for developing nations
– What are the economic consequence of relative poverty in developing and developed nations

The following are links to some interesting reading and videos on relative and absolute poverty:

Data on UK relative poverty:

Some very interesting videos on peoples experience of poverty in the UK:

Global Hunger Stats:

An interesting article on absolue poverty in the Horn of Africa by Jeffery Sachs:

Relative Poverty InfoGraphic:

Infographic: Poverty In America – The Struggle To Get Ahead

UK Child Poverty infographic:





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