Question

What is the difference between relative poverty and absolute poverty? How does Statscan measure each? Under what circumstances is each measure relevant? Explain.

Answer 1

To understand the relative and absolute poverty, we must have to understand the poverty first, though as an individual we all know about the three class of people in the society upper class (which are basically the richer group of people), then the middle class people those are neither Richer and nor poor, then the final class comes to Poor Class or low class of the society, those are actually struggling to fulfill their day to day need fulfillment. So to the overall idea in the scenario let’s discuss further. In simple terms, poverty is not having enough money or access to resources to enjoy a decent standard of living; be that the lack of access to healthcare, education or water and sanitation facilities etc.

Now let’s start with the difference of both;

1. Meaning;

- Absolute poverty is when household income is below a certain level, which makes it impossible for the person or family to meet basic needs of life including food, shelter, safe drinking water, education, healthcare, etc

- Relative poverty is when households receive 50% less than average household incomes, so they do have some money but still not enough money to afford anything above the basics. This type of poverty is, on the other hand, changeable depending on the economic growth of the country.

2. Measures;

- Absolute method is set at a fixed level that does not change over time. There might be a huge gap between the current level of poverty and the historical standard when this approach is used.

- When a relative approach is used, a (changeable) level of what households should be able to rely on in order to meet their basic needs is set, and anyone who falls below that is counted in this category.

3. Biological Difference;

- Absolute poverty focuses more on the biological needs.

- Relative poverty has nothing to do with biological needs.

4. Difference from the viewpoint of Income;

- Income level is highly considered in absolute poverty.

- Income is not considered under the relative poverty measurement.

5. Dependency;

- Relative poverty varies between developed and developing countries.

- While in Absolute Poverty this is not the scenario.

The states can measure such poverty scenarios as follows, Some of the developed countries have a smaller number of people who are under relative poverty while developing countries, especially those in the African region has a significant number of people under the relative poverty measurement model.

Which is not same for extreme poverty, it has been maintained at a constant by the World Bank. Any individual who lives under $1.90 is considered to be experiencing absolute poverty under the World Bank measurement paradigm. It is important to highlight that a significant number of populations in Africa live under highlighted amount.