Difference Between Absolute and Relative Poverty | Absolute vs Relative Poverty

By Ritika Pant|Updated : January 9th, 2023

The major Difference Between Absolute and Relative Poverty is that in absolute poverty, the income is measured to be below a specified level which debilitates people from affording basic necessities, whereas, in relative poverty, there is a lack of economic and financial resources when compared to the standard level of living in society.

Difference Between Absolute and Relative Poverty PDF

Poverty is the inability of a person to access the necessities of life. Absolute and relative poverty are the two terms to measure the poverty level. Read more about the Difference Between Absolute and Relative Poverty here based on multiple factors such as how to measure, definitions, quality of life, etc.

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Difference Between Absolute and Relative Poverty

The key difference between absolute poverty and relative poverty is that absolute poverty is the state when people are not able to meet their daily needs and live below the poverty line, and relative poverty is defined as that state when the standard of living of people is not the same as that of others. The difference between relative poverty and absolute poverty has been discussed in the table below.

Absolute vs Relative Poverty

Difference Between Absolute and Relative Poverty

Absolute Poverty

Relative Poverty

It is a situation where a person fails to earn more than the financial resources required to survive. It is $ 1.9 per person per day according to the standards of the United Nations.

It is a situation where people earn more than the basic income but 50-60% less than the average national income. Therefore, relative poverty measures poverty in a comparative sense.

Absolute poverty takes into consideration only the basic financial requirements. It fails to consider the people's recreational, psychological, social, and cultural needs.

Though they may be better off than people in absolute poverty, they can still not enjoy the standard of life that others enjoy.

It is determined using a poverty line.

Lorenzo curve and Gini coefficient help to measure poverty in a relative sense.

It ignores living standards and overall socioeconomic disparity.

It takes into consideration the living standard and economic growth of the country.

In most cases, the poverty line remains the same for years.

Relative poverty levels change according to the change in the economic circumstances of a country.

It is not possible to completely eliminate absolute poverty.

It can, however, be eliminated to some extent.

People living in this condition experience the worst living standards.

People living in relative poverty enjoy fairly better living standards than those living in absolute poverty. However, they can still not enjoy the same living standards as others in the country.

Absolute Poverty and Relative Poverty

Before learning the difference between absolute and relative poverty, let us first discuss their meanings. Usually, the poverty line does not change with changing circumstances.

The two types of poverty that exist in our society is absolute poverty and relative poverty.

  • The former is measured using a poverty line, while the latter is measured using Gini-Coefficient and Lorenzo Curve.
  • The main difference between absolute and relative poverty is that the former is a situation where people live below the designated poverty line.
  • The latter is a condition where people have access to the basic necessities of life but are worse off vis-à-vis others in the country.

What is Absolute Poverty?

The international poverty line is a monetary threshold below which a person is deemed impoverished. The global poverty line is $1.90 per day. Absolute poverty is when an individual or a family lives with an income below the poverty line.

  • In such conditions, the quality of life is poor, and people cannot meet their daily necessities.
  • Debt, rising world population, natural disasters, armed conflict, and child labor are all causes of absolute poverty.
  • A 12-year-old youngster who has never been to the doctor or attended school illustrates utter poverty.
  • Absolute poverty is becoming less relevant, especially in countries with thriving economies and growing living standards.

What is Relative Poverty?

A household experiences relative poverty if it earns 50% (or 60% in some countries) of the typical household income in its economy. They have some money to meet their basic necessities and nothing more.

  • Causes of relative poverty include poor health, unemployment, and inequalities within the labor market.
  • An example of relative poverty is an unemployed person who relies on government assistance.

Summary:

Key Difference Between Absolute and Relative Poverty

The key Difference Between Absolute and Relative Poverty is that Absolute poverty results in the destitution of the people as they earn less than the livable wage as decided by the economy. People living in absolute poverty can't afford basic necessities. Relative Poverty is when the person is earning above the poverty line but is still earning 50-60% less than the average person.

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FAQs on Difference Between Absolute and Relative Poverty

  • The primary Difference Between Absolute and Relative Poverty is that the former results in a poor standard of living for the people as they earn less than the livable wage as the economy decides.

    • People living in absolute poverty can't afford basic necessities.
    • Relative Poverty is when the person is earning above the poverty line but is still earning 50-60% less than the average person.
  • Absolute poverty and Relative Poverty differ greatly. Absolute poverty is defined as a state where people cannot afford necessities. It is concerned with the capability of buying resources required to sustain a normal life.

    • Relative poverty is when families cannot get the same standard of living as others despite fulfilling their basic needs.
    • It is measured by economists using the Gini-Coefficient and Lorenzo Curve.
  • Examples of absolute poverty include people who cannot afford a hospital for treatment or medicines, children unable to get basic education, etc. Some examples of relative poverty are unemployed people, poor health and sanitary conditions, etc.

  • Yes. The main difference between absolute and relative poverty is that while the former is invariant of the country's changing economic landscape, the latter is beside the latest economic developments. Therefore, many scholars use relative poverty to measure poverty levels in countries with booming economies.

  • Absolute poverty would be considered the worse of the two as relative poverty can be more easily resolved. Absolute poverty would require recognizing systematic reasons for the poor, which is a lengthier process.

  • The Difference Between Absolute and Relative Poverty in terms of measurement is that one must first create thresholds to measure if poverty is absolute or relative.

    • Data must be gathered to estimate the total population that could be categorized as impoverished.
    • A (changeable) amount of what families should be able to rely on to fulfill their basic needs is set when a relative approach is adopted.
    • Anyone less than that is included in this group.
  • All accounts of relative poverty are fundamentally narratives of inequality and, as a result, usually separate from our intuitive knowledge of poverty. Relative poverty occurs when a family's income is less than the median income in a certain country.

  • Absolute poverty is caused by debt, rising world population, natural disasters, disputes, child labour, insufficient access to necessities, poor education, lack of infrastructure, and inadequate advancements in Agriculture.

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