Difference between absolute poverty and relative poverty

Economic Development – Poverty

Absolute Poverty vs. Relative Poverty

Absolute poverty is like a fixed budget that everyone must live under. It means a person or household cannot meet the basic needs that are essential for survival – food, clean water, shelter, and basic healthcare. Think of it as a minimum survival line that does not change with time or location.

Relative poverty is more about social comparison. It measures how far a person or household is from the average standard of living in a particular society. If you can’t afford the same clothes, technology, or leisure activities as most people around you, you’re in relative poverty. It’s like a social ladder where the top rung changes as society’s wealth changes.

Key Differences

• Measurement: Absolute poverty uses a fixed threshold (e.g., $1.90 per day in 2011 PPP). Relative poverty uses a percentage of median income (e.g., 60% of the median).
• Scope: Absolute poverty is global; relative poverty is national or regional.
• Time sensitivity: Absolute thresholds can be updated for inflation, but relative thresholds shift with economic growth.
• Policy focus: Absolute poverty targets survival needs; relative poverty targets inequality and social inclusion.
• Illustration: A child in a rural village may be in absolute poverty (no food), while a city teenager may be in relative poverty (cannot afford a smartphone).

Analogies & Examples

1. Water Bottle Analogy (Absolute): Imagine a bottle that can hold only 1 litre of water. If you need 2 litres to stay hydrated, you’re in absolute poverty – you simply lack the capacity to meet a basic requirement.
2. Dress Code Analogy (Relative): In a school where most students wear jeans and T‑shirts, a student who can only afford a T‑shirt and no jeans feels left out. That’s relative poverty – you’re missing out on the social norm.
3. Example 1 (Absolute): A family in a remote area cannot afford a basic stove, so they cook over an open fire. They’re in absolute poverty because they lack essential cooking infrastructure.
4. Example 2 (Relative): A city worker earns enough to cover rent and food but cannot afford a car, which most of their peers have. They’re in relative poverty because their standard of living is below the social average.

Comparison Table

Take‑away Questions

• Why might a country reduce absolute poverty but still have high relative poverty?
• How can governments use relative poverty measures to design social programmes?
• What are the pros and cons of using a fixed threshold versus a relative threshold?

Remember: Understanding both types of poverty helps us create fairer, more inclusive societies! 🌍💡