Poverty can be defined in many different ways. Some attempt to reduce it to numbers, while others argue that a more ambiguous definition must be used. In the end, a combination of both methods is best. Today, most economists and social workers use two ways to define poverty.

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Some people describe poverty as a lack of essential items – such as food, clothing, water, and shelter – needed for proper living. At the UN’s World Summit on Social Development, the ‘Copenhagen Declaration’ described poverty as “…a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.” When people are unable to eat, go to school, or have any access to health care, then they can be considered to be in poverty, regardless of their income. To measure poverty in any statistical way, however, more rigid definitions must be used.

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A Bengali carpenter working. Poor workers in developing countries can lead very insecure lives - a single unforseen event can drive them into poverty.

While there are various numerically defined methods to measure and quantify poverty, two are simple enough that they are often used to define poverty (other methods are examined in the Measuring Poverty I and Measuring Poverty II sections of this site), relative poverty measurement and absolute poverty measurement. Both are based on income or consumption values making gathering information to compile statistics on poverty much easier.

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Relative poverty measures are the simplest ways to determine the extent of poverty in individual countries. Using this method, the entire population is ranked in order of income per capita. The bottom 10% (or whatever percentage the government chooses to use) is then considered ‘poor’ or ‘impoverished.’ This can be fine for country-wide measurements, but it has some major drawbacks in global use. If, say, a 10% relative poverty measurement was applied in a global setting, it would appear that both an industrialized country, such as the U.S., and a sub-Saharan African country had the same 10% poverty rate, even though the conditions of the poor in sub-Saharan Africa are much worse than conditions in the U.S. For this reason, absolute poverty measures are more often used to define poverty on a global scale.

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A worker breaks bricks to make gravel for use on a road - the job pays around $1 per day.

Before absolute poverty measures can be used to define poverty, researchers must first determine if they want to measure income amounts or consumption amounts. Income refers to the amount of money someone makes, while consumption refers to the monetary value of the goods that person actually consumes. If you earn $4 a day, but are able, through other means, to consume $5 a day, then your yearly income would be $1,440, but your yearly consumption would only be $1,860. The differences can be significant, because depending on their situation poor people may be able to get goods for less. While it might appear at first glance that income and consumption are the same, closer examination reveals that income is just one factor, albeit a large one, which determines consumption amounts.

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Absolute poverty measures set a ‘poverty line’ at a certain income amount or consumption amount per year, based on the estimated value of a ‘basket of goods’ (food, shelter, water, etc.) necessary for proper living. For example, if $5 a day is determined to be the income poverty line in a country, then anyone with an income of less than $1860 would be considered impoverished. If instead a poverty line based on consumption was used, anyone consuming goods with a monetary value of less than $1860 would be in poverty.

Many impoverished people engage in agricultural jobs. Some are 'subsistence farmers,' and are barely able to produce enough food to stay alive.

The most commonly used definition of global poverty is the absolute poverty line set by the World Bank. Poverty is set at an income of $2 a day or less, and extreme poverty is set at $1 a day or less. This line was first created in 1990 when the World Bank published its World Development Report and found that most developing countries set their poverty lines at $1 a day. The $2 mark was created for developing nations with slightly better income levels than their $1 a day counterparts. More developed countries are permitted to set their poverty lines elsewhere (it would be silly to assume a statistically significant group of people in the U.S. made less than $1 a day, though there are obviously many impoverished people living there). For highly industrialized countries, such as Britain, Japan, and the U.S., the absolute poverty line is usually set higher (for example, the line has been set at $14.40 in the past). The 2005 poverty line for single individuals in the United States is set at $26.19 a day.

As of 2001, 1.1 billion people, or 21% of the 2001 world population, had incomes less than the World Bank’s ‘$1 a day’ line for extreme poverty. 2.7 billion people had incomes less than the World Bank’s ‘$2 a day’ line for poverty. While this is a decline from past years (in 1981, there were 1.5 billion people in extreme poverty), it still means that almost one-half of the world’s population lives in poverty, mainly in sub-Saharan African and South Asia.

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One other factor many experts on poverty talk about when they talk about defining poverty is empowerment. 'Empowerment' refers to the ability of an individual to make choices regarding his or her life. Often, the poor are not empowered - they are forced to work at certain jobs or do certain things, and often, this state of existence can be linked to poverty. When people are disempowered, many times, they are in poverty.

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2005 HHS Poverty Guidelines

Bell, Peter. Telephone Interview. 19 December 2005.

Gilbert, Geoffry. World Poverty. Santa Barbara: ABC-CLIO 2004

Reddy, Sanjay G. How Not to Count the Poor. Columbia University, 2005.

McHugh, Kathleen. Telephone Interview. 5 January 2006.

UN World Summit on Social Development

U.S. Census Bureau Small Area Income & Poverty Estimates

Wikipedia: Poverty

Wikipedia: Poverty Line

Wikipedia: Purchasing Power Parity

World Bank: PovertyNet: Overview

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