Poverty Threshold

Poverty threshold/ Poverty line is known as the bare minimum level of income that is declared adequate for the sustenance of a human in a particular country. The common international poverty line for the world earlier used to be $1 per day. But later, mainly due to inflationary changes, it was revised to $1.25 per day by the World Bank. Determining this poverty line is done by estimating the cost of all the essential resources that an average adult human consumes during a year. One major constituent this annual cost is house rent/ accommodation. Hence this factor of real estate market is paid special attention while estimating the poverty line.

Absolute Poverty

Absolute poverty is defined as the level of poverty in terms of the minimum level of life sustaining material required, i.e. food, shelter, clothing and health care. For this measure to be absolute, it is important that the level determined is of individual countries, regions and cultures. The logic behind estimating absolute poverty is that survival takes the same amount of resources around the globe, and every human should be subject to same indicators if the comparisons made are needed to be meaningful.

Relative Poverty

It is the most useful measure for ascertaining poverty rates in developed nation. Relative poverty reflects better the cost of social inclusion and equality of opportunity in a specific time and space. The measures of relative poverty are used by United Nations Children’s Fund (UNICEF), United Nations Development Program (UNDP), etc. Relative poverty defines poverty as being below some relative poverty line/ poverty threshold. One drawback of these measures is that they can sometimes produce odd results. However, measuring relative poverty is somewhat similar to measuring income inequality. These two are inversely related. If a society gets more income equality, relative poverty will fall, and vice versa.

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