Measuring Poverty

Measuring poverty
Poverty is the condition of lacking basic human needs such as food, clean water, health care, clothing, and shelter due to the inability to afford them. This is also referred to as absolute poverty or destitution. Relative poverty is the condition of having fewer resources or less income than others within a society or country, or compared to worldwide averages.
When measured, poverty may be absolute or relative poverty. Absolute poverty refers to a set standard which is consistent over time and between countries. An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body
Relative poverty, in contrast, views poverty as socially defined and dependent on social environment where certain roles and positions influence individuals belonging to a certain group. One relative measurement would be to compare the total wealth of the poorest one-third of the Relative poverty is a poverty measure based on a poor standard of living or a low income relative to the rest of society. Unlike absolute poverty, it does not necessarily imply that physical human necessities of nutrition, health and shelter cannot be met; instead it suggests that the lack of access to many of the goods and services expected by the rest of the contemporary society leads to social exclusion and damaging results for the individuals and families in relative poverty.population with the total wealth of richest 1% of the population. One of the consequences of using relative poverty to judge societies over time is that the poverty line tends to rise as incomes rise. This may be desirable if it reflects a changing social consensus about minimum acceptable standards of living. 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. One alternative method sometimes used to measure poverty is the measure of inequality in income distribution. This can help show the difference between the richest percentiles of a society and the poorest. While this does not actually show who in the society is truly in poverty by international standards, it can show who is considered poor compared to others in the same society. Inequality: When discussing poverty, inequality often refers to the income gap between the rich and poor of society. The greater the gap, the greater the inequality. The main poverty line is the minimum level of income deemed necessary to achieve an adequate standard of living in a given country and is a relative poverty measure based on "economic distance". Criticisms-Using a poverty threshold is problematic because having an income marginally above it is not substantially different from having an income marginally below it: the negative effects of poverty tend to be continuous rather than discrete, and the same low income affects different people in different ways. A poverty threshold relies on a quantitative, or purely numbers-based, measure of income. If other human development-indicators like health and education are used, they also must be quantified. The poverty line can also be either too high or too low. There are various criticisms of these measurements.
Poverty Gap Index The mean distance below the poverty line as a proportion of the poverty line where the mean is taken over the whole population, counting the non-poor as having zero poverty gap.
Why is the current poverty measure inadequate?
The current poverty measure is flawed in two ways.
1. The current poverty level – that is, the specific dollar amount – is based on outdated assumptions about family expenditures.
Food now comprises only a small perrcentage of an average family’s expenses, while the costs of housing, child care, health care, and transportation have grown disproportionately. Thus, the poverty level does not reflect the true cost of supporting a family. In addition, the current poverty measure is a national standard that does not adjust for the substantial variation in the cost of living from state to state and between urban and rural areas.
2. The method used to determine whether a family is poor does not accurately count family resources. (income)
3. Income poverty happens when a household takes in less than one US dollar per day. This means that people will not have enough food or medicine and they will have poor clothes and houses. Income poverty is due to people not having access to money or other assets. If people do not have any other assets like land to grow their own food, then income poverty can result in stunted growth and early death.
When determining if a family is poor, income sources counted include earnings, interest, dividends, Social Security, and cash assistance. But income is counted before subtracting payroll, income, and other taxes, overstating income for some families. On the other hand, the federal Earned Income Tax Credit isn’t counted either, underestimating income for other families. Also, in-kind government benefits that assist low-income families – food stamps, Medicaid, and housing and child care assistance – are not taken into account. This means that official poverty statistics cannot be used to analyze the effectiveness of these programs.