There are two ways to define poverty:

Absolute poverty

Defining absolute poverty means trying to agree a general definition of poverty which is valid at all times and for all economies – this is difficult to do.

The simplest definition of being poor is ‘…being unable to subsist…that is, being unable to eat, drink, have shelter and clothing. A common monetary measure of absolute poverty is ‘..receiving less than $1 a day…’’. (In 2008, the World Bank revised this figure to $1.25 a day, and then again to $1.90 a day in 2015.)

It is also possible to establish an international poverty line, at, say at $700 per capita per year, and then compare countries, by estimating the purchasing power equivalent of that sum in terms of the countries own currency.

Relative poverty

It can be argued that poverty is best understood in a relative way – what is poor in New York is not the same as what is poor in Mumbai (where over 50% of the population live in slums.)

Many relative definitions of poverty conclude that it is the inability to reach a minimum accepted standard of living in a particular society.

Another approach is to look at deprivation,  the poor being defined as those who are deprived from the benefits of a modern economy.

Definitions of relative poverty vary considerably, but the definition of the UK government is typical for developed countries – this states that the poor are those living on ‘..less than 60% of median income..’.

If we take the international poverty line as a guide, then, as a region, Asia has the highest numbers of its population who are poor.

However, as a region of the world, Sub-Saharan Africa has the highest level of poverty as a proportion of total population, at over 60%. The second poorest region is Latin America, with 35% of its population poor. 

EU Countries at risk of poverty

Poverty - at risk | amCharts

The Human Poverty Index - HPI

The Human Poverty Index (HPI), which was introduced in 1997, is a composite index which assesses three elements of deprivation in a country - longevity, knowledge and a decent standard of living. There are two indices, the HPI – 1, which measures poverty in developing countries, and the HPI-2, which measures poverty in OCED developed economies.

HPI for developing countries (HPI-1)

There are three elements to the HPI – 1.

  1. The first element is longevity, which is defined as the probability of not surviving to the age of 40.

  2. The second element is knowledge, which is assessed by looking at the adult literacy rate.

  3. The third element is to have a decent standard of living. Failure to achieve this is identified by the percentage of the population not using an improved water source, and the percentage of children under weight for their age. Both indicate being deprived from a decent standard of living.

HPI for developed (OECD) countries - HPI-2

The elements of the HPI – 2 are:

  1. Longevity - having a long and healthy life, and the specific indicator for this is the probability at birth of not surviving to the age of 60;

  2. Knowledge – the percentage of adults lacking functional literacy skills;

  3. A decent standard of living – the percentage of the population living below the poverty line, which is defined as those below 50% of median household disposable income, and social exclusion as measured by the long term unemployment rate.

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