What this lesson teaches
I can tell absolute poverty from relative poverty.
Syllabus K343, 5.2.1. Definitions of absolute and relative poverty: difference between absolute poverty and relative poverty
Make a guess
A family in a rich country has a home and enough food, but cannot afford internet access or school trips that most families have. Is it poor?
- No, because it has food and shelter.
- Yes, in relative poverty.
- Yes, in absolute poverty.
Show the answer
Yes, in relative poverty.
Relative poverty means having much less than the typical household in your own society, even if basic needs are met.
Absolute poverty is not having enough for basic needs; relative poverty is being poor compared with others in the same society.
Absolute poverty means not having enough income to meet basic needs: food, clean water, a home, clothes and basic health care. The World Bank uses a poverty line of a few dollars a day to count people in extreme poverty around the world.
Relative poverty means having much less than the typical person in your own society. A common measure is an income below 60% of the median income in that country.
Relative poverty depends on the society. Someone in relative poverty in a rich country may have a home and enough food. But they cannot afford things most people there take for granted.
Growth can cut absolute poverty. But relative poverty can stay high if most of the gains go to the rich.
Sort these
Sort each household by the kind of poverty it faces.
Groups: Absolute poverty, Relative poverty.
- A household earns well below the national median income.
- A family cannot afford enough food for every meal.
- A village has no clean water and no clinic it can pay for.
- A retiree can pay for meals but never for a phone plan or outings.
- A worker earns too little to rent any shelter.
- A family has food and a flat but no money for school trips.
Show the answer
Absolute poverty
- A family cannot afford enough food for every meal. Food is a basic need, so going without it is absolute poverty.
- A village has no clean water and no clinic it can pay for. Lacking clean water and basic health care means basic needs are not met.
- A worker earns too little to rent any shelter. Without a home, a basic need is unmet, whatever others in society earn.
Relative poverty
- A household earns well below the national median income. Relative poverty is measured against the typical income in that country.
- A retiree can pay for meals but never for a phone plan or outings. Compared with typical households, she has far less, though her basic needs are met.
- A family has food and a flat but no money for school trips. Basic needs are met, but it cannot afford what most families in its society have.
- Absolute poverty
- Cannot meet basic needs.
- Relative poverty
- Income well below the typical level in that society, e.g. below 60% of median.
Worked example: Telling them apart
Classify each situation.
- A family in a rural area cannot afford enough food or clean water: absolute poverty.
- A family in a rich city can afford basics but not internet access, school trips or holidays that most families have: relative poverty.
- If incomes double for everyone, absolute poverty falls, but relative poverty may not change, because the gap stays.
Watch out for this
There is no poverty in rich countries.
Rich countries have little absolute poverty but can have significant relative poverty, where some households have far less than most.
Check your understanding
A household's income is well below the national average, but it can afford food and shelter. What is it experiencing?
- Relative poverty
- Absolute poverty
- No poverty
Show the answer
Relative poverty
Right. It is poor compared with others in its society.
Check your understanding
A household earns less than half the typical income in its country, but it can afford food, shelter and clothing. Which describes it?
- In relative poverty but not absolute poverty
- In absolute poverty but not relative poverty
- In both absolute and relative poverty
- In neither absolute nor relative poverty
Show the answer
In relative poverty but not absolute poverty
Right. It meets its basic needs but is poor compared with others in its society.