Poverty and Economic Inequality
THE GLOBAL CONTEXT: POVERTY AND ECONOMIC INEQUALITY AROUND THE WORLD
Defining and Measuring Poverty
Poverty has traditionally been defined as the lack of resources necessary for material well-being: food, water, housing, land, health care.
Absolute poverty: lack of resources that leads to hunger and physical deprivation
Relative poverty: a deficiency in material and economic resources compared with some other population
2. International Measures of Poverty
Absolute Poverty Measures
The World Bank sets a “poverty threshold” at $1 a day to compare poverty in the developing world, $2 per day in Latin America, $4 a day
in Eastern Europe and the Commonwealth of Independent States (CIS), and $14.40 per day in industrial countries.
Another poverty measure is based on whether individuals are experiencing hunger, which is defined as consuming less than 1,960 calories a
Relative poverty measure (sometimes used in industrialized countries): household is poor if household income is less than 50% of median
household income in that country.
Poverty is multidimensional
Includes such dimensions as food insecurity, poor housing, unemployment, psychological distress, powerlessness, hopelessness,
vulnerability, and lack of access to health care, education, and transportation.
To capture the multidimensional nature of poverty, the Human Poverty Index (HPI) is based on three measures of deprivation:
Deprivation of a long, healthy life
Deprivation of knowledge
Deprivation in decent living standards
(3) The Human Poverty Index for developing countries (HPI-1) is measured differently than the Human Poverty Index for industrialized countries
(4) Among the 18 industrialized countries for which the HPI-2 is calculated:
(a) Sweden has the lowest level of human poverty (6.5%), followed by Norway (7.0%), and the Netherlands (8.2%).
The industrialized countries with the highest rates of human poverty are Italy (29.9%), Ireland (17%) and the United States (16%).
U. S. Measures of Poverty
In 1964, the Social Security Administration devised a poverty index based on data that indicated that families spent about one-third of their
income on food.
The official poverty level was set by multiplying food costs by three.
Since then, the poverty level has been updated annually for inflation but has otherwise remained unchanged.
Poverty thresholds vary by the number of adults and children in the family and by age of the family head of household.
Those living in a household with a pre-tax income below the official poverty line are considered “poor;” those above the poverty line, but
not by much, are classified as “near poor;” those living below 50% of the poverty line live in “deep poverty” (also referred to as “severe
A common working definition of “low-income” households is households with incomes between 100 and 200 percent of the federal poverty