Poverty threshold
The poverty threshold, poverty limit, poverty line, or breadline[1] is the minimum level of income deemed adequate in a particular country.[2] The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for the average adult.[3] The cost of housing, such as the rent for an apartment, usually makes up the largest proportion of this estimate, so economists track the real estate market and other housing cost indicators as a major influence on the poverty line.[4] Individual factors are often used to account for various circumstances, such as whether one is a parent, elderly, a child, married, etc. The poverty threshold may be adjusted annually. In practice, like the definition of poverty, the official or common understanding of the poverty line is significantly higher in developed countries than in developing countries.[5][6]
In September 2022, the World Bank updated the International Poverty Line (IPL), a global absolute minimum, to $2.15 per day[7] (in PPP). In addition, as of 2022, $3.65 per day in PPP for lower-middle income countries, and $6.85 per day in PPP for upper-middle income countries.[8][9] Per the $1.90/day standard, the percentage of the global population living in absolute poverty fell from over 80% in 1800 to 10% by 2015, according to United Nations estimates, which found roughly 734 million people remained in absolute poverty.[10][11]
History[edit]
Charles Booth, a pioneering investigator of poverty in London at the turn of the 20th century, popularised the idea of a poverty line, a concept originally conceived by the London School Board.[12] Booth set the line at 10 (50p) to 20 shillings (£1) per week, which he considered to be the minimum amount necessary for a family of four or five people to subsist on.[13] Benjamin Seebohm Rowntree (1871–1954), a British sociological researcher, social reformer and industrialist, surveyed rich families in York, and drew a poverty line in terms of a minimum weekly sum of money "necessary to enable families … to secure the necessaries of a healthy life", which included fuel and light, rent, food, clothing, and household and personal items. Based on data from leading nutritionists of the period, he calculated the cheapest price for the minimum calorific intake and nutritional balance necessary, before people get ill or lose weight. He considered this amount to set his poverty line and concluded that 27.84% of the total population of York lived below this poverty line.[14] This result corresponded with that from Booth's study of poverty in London and so challenged the view, commonly held at the time, that abject poverty was a problem particular to London and was not widespread in the rest of Britain. Rowntree distinguished between primary poverty, those lacking in income and secondary poverty, those who had enough income, but spent it elsewhere (1901:295–96).[14]
The poverty threshold was first developed by Mollie Orshansky between 1963 and 1964. She attributed the poverty threshold as a measure of income inadequacy by taking the cost of food plan per family of three or four and multiplying it by a factor of three. In 1969 the inter agency poverty level review committee adjusted the threshold for only price changes.[15]
Relevance[edit]
An outdated or flawed poverty measure is an obstacle for policymakers, researchers and academics trying to find solutions to the problem of poverty. This has implications for people. The federal poverty line is used by dozens of federal, state, and local agencies, as well as several private organizations and charities, to decide who needs assistance. The assistance can take many forms, but it is often difficult to put in place any type of aid without measurements which provide data. In a rapidly evolving economic climate, poverty assessment often aids developed countries in determining the efficacy of their programs and guiding their development strategy. In addition, by measuring poverty one receives knowledge of which poverty reduction strategies work and which do not,[57] helping to evaluate different projects, policies and institutions. To a large extent, measuring the poor and having strategies to do so keep the poor on the agenda, making the problem of political and moral concern.
Threshold limitations[edit]
It is hard to have exact number for poverty, as much data is collected through interviews, meaning income that is reported to the interviewer must be taken at face value.[58] As a result, data could not rightly represent the situations true nature, nor fully represent the income earned illegally. In addition, if the data were correct and accurate, it would still not mean serving as an adequate measure of the living standards, the well-being or economic position of a given family or household. Research done by Haughton and Khandker[59] finds that there is no ideal measure of well-being, arguing that all measures of poverty are imperfect. That is not to say that measuring poverty should be avoided; rather, all indicators of poverty should be approached with caution, and questions about how they are formulated should be raised.
As a result, depending on the indicator of economic status used, an estimate of who is disadvantaged, which groups have the highest poverty rates, and the nation's progress against poverty varies significantly. Hence, this can mean that defining poverty is not just a matter of measuring things accurately, but it also necessitates fundamental social judgments, many of which have moral implications.