🍲 Absolute poverty
Cannot meet basic needs such as food, water and shelter. Judged against a fixed standard, such as the international poverty line. Found mostly, but not only, in low-income countries.
Poverty » Absolute and Relative Poverty
What you'll learn this session
Study time: 30 minutes
Cambridge spec: 5.2.1, 5.2.2
- What absolute poverty is, and what an international poverty line is
- What relative poverty is, and how it differs from absolute poverty
- The main causes of poverty: unemployment, low wages, illness, age and environmental factors
- How to explain causes of poverty in an exam answer
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Unlock This CourseWhat is poverty?
Poverty means having too little income or too few resources to live a decent life. Economists do not use just one meaning, though. They split poverty into two types, and the difference between them is a favourite exam topic.
Key terms:
- Absolute poverty: when a person or household is unable to meet their basic needs, such as enough food, clean water, shelter and clothing.
- Relative poverty: when a person or household has an income well below the average income in their country.
- International poverty line: a very low level of income set by international organisations. People living on less than this are counted as being in absolute poverty.
Absolute poverty
Absolute poverty is about survival. It does not depend on how rich other people are. A family in absolute poverty cannot afford the things a human being needs to stay healthy and safe. For example, they may go hungry most days, have no safe drinking water or live in a shelter that gives little protection from the weather.
To compare countries, international organisations use an international poverty line. It is a very low daily income, set so that the same standard is used in every country. Anyone below the line is counted as living in absolute poverty. You do not need to learn any figures. You only need to know what the line is for: it gives one common way to count how many people cannot meet their basic needs.
Relative poverty
Relative poverty is about how your income compares with other people in the same country. A household is in relative poverty when its income is well below the average income in that country. It may still afford food and shelter, but it cannot afford things that most people in that country take for granted.
Because it depends on the average, relative poverty changes from country to country. A household that is poor compared with others in a rich country may have more income than an average household in a very poor country.
📊 Relative poverty
Income well below the average in the country. Judged against other people in the same country. Found in rich and poor countries alike.
Worked example
In Parvania the average household income is $2,000 a month. Household A earns $600 a month. It can buy food and pay rent, but it cannot afford a laptop for school or a family holiday. Household B earns $50 a month and cannot afford enough food every day. Household A is in relative poverty, because its income is well below the average. Household B is in absolute poverty, because it cannot meet its basic needs. Household B is also in relative poverty, because its income is far below the average.
Causes of poverty
There is no single reason why households fall into poverty. The spec asks you to know five causes.
💼 Unemployment
People without a job have no wage. If there are no benefits, or they are very low, the household may have almost no income. You looked at what unemployment does in an earlier lesson, so remember it here as a direct route into poverty.
💵 Low wages
Some people have jobs but are paid so little that they still cannot afford basic needs. This is common for unskilled workers, who are easy to replace, and for workers with little bargaining power.
🤒 Illness
A sick person cannot work as much, or at all, so their income falls. Medicines and treatment cost money too. If a main earner falls ill, a whole household can be pushed into poverty.
👴 Age
Older people may be too old to work, and children cannot work. Where there is little or no state pension, older people may have to rely on savings or family. A household with many young children and only one earner can also struggle.
🌊 Environmental factors
Drought, flooding and poor land can destroy crops and animals, so farming households lose both their income and their food. In many countries a large share of people depend on farming, so one bad harvest can cause absolute poverty very quickly.
🔗 Causes link together
One cause often leads to another. A drought destroys crops, so farm workers lose their jobs. With no income they cannot afford healthcare, and illness makes it harder to find work again. Poverty can become a trap.
Worked example
A farming family in Selmara relies on one hectare of land. A drought destroys most of their maize. They have little to sell, earn almost nothing, and cannot buy enough food or medicine. The cause is an environmental factor (drought). It leads to absolute poverty because the family can no longer meet its basic needs. If a family member then falls ill, the poverty becomes even harder to escape.
Common mistakes
Many students say relative poverty means being poor compared with a rich country. It is measured against the average income in the same country. Another slip is thinking that only poor countries have poverty, when relative poverty exists in rich countries too. Finally, some answers just write "illness" or "age" without saying how it lowers income, and that explanation is what earns the marks.
Exam-style question
In the country of Kalvera, average household income is $1,500 a month. A study finds that many households in the north earn less than $400 a month. Most of them are farm workers on very low wages, and the region has suffered from repeated drought. Some households cannot afford enough food for the whole year.
(a) Define absolute poverty. [2 marks]
(b) Explain the difference between absolute poverty and relative poverty. [4 marks]
(c) Explain two causes of poverty in northern Kalvera. [4 marks]
Model answer
(a) Absolute poverty is when a person or household is unable to meet (1) their basic needs, such as food, water and shelter (1).
(b) Absolute poverty is when someone cannot afford their basic needs (1), whereas relative poverty is when a household's income is well below the average in their country (1). A household in relative poverty may still be able to afford food and shelter (1), but it cannot afford what most people in that country take for granted (1).
(c) One cause is environmental factors (1): drought destroys crops, so farming households lose their income and food (1). Another cause is low wages (1): farm workers who earn less than $400 a month cannot afford enough food for the whole year (1).
Exam tip
In an Explain question about causes, name the cause and then add a "so" or "because" sentence that links it to lower income or being unable to meet basic needs. Use the information in the paragraph you are given.