The common international poverty line has in the past been roughly $1 a day.

In 2008, the World Bank came out with a revised figure of $1.25 at 2005 purchasing-power parity (PPP).

Determining the poverty line is usually done by finding the total cost of all the essential resources that an average human adult consumes in one year. This approach is needs-based in that an assessment is made of the minimum expenditure needed to maintain a tolerable life. The largest of these expenses is typically the rent required to live in an apartment, so historically, economists have paid particular attention to the real estate market and housing prices as a strong poverty line affector.

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 each year.

Absolute poverty

A measure of absolute poverty quantifies the number of people below a fixed real poverty threshold.[citation needed] It is a level of poverty as defined in terms of the minimal requirements necessary to afford minimal standards of food, clothing, health care and shelter.[7] (See definition from Glossary of Sociology.) For the measure to be absolute, the line must be the same in different countries, cultures, and technological levels. Such an absolute measure should look only at the individual's power to consume and it should be independent of any changes in income distribution. Such a measure is possible only when all consumed goods and services are counted and when PPP-exchange rates are used (see purchasing power parity).[citation needed] The intuition behind an absolute measure is that mere survival takes essentially the same amount of resources across the world and that everybody should be subject to the same standards if meaningful comparisons of policies and progress are to be made. Notice that if everyone's real income in an economy increases, and the income distribution does not change, absolute poverty will decline.

Measuring poverty by an absolute threshold has the advantage of applying the same standard across different locations and time periods, making comparisons easier. On the other hand, it suffers from the disadvantage that any absolute poverty threshold is to some extent arbitrary; the amount of wealth required for survival is not the same in all places and time periods. For example, a person living in far northern Scandinavia requires a source of heat during colder months, while a person living on a tropical island does not.

This type of measure is often contrasted with measures of relative poverty (see below), which classify individuals or families as "poor" not by comparing them to a fixed cutoff point, but by comparing them to others in the population under study.[citation needed]

The term absolute poverty is also sometimes used as a synonym for extreme poverty. Absolute poverty is the absence of enough resources (such as money) to secure basic life necessities.

According to a UN declaration that resulted from the World Summit on Social Development in Copenhagen in 1995, absolute poverty is "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services."[8]

David Gordon's paper, "Indicators of Poverty & Hunger", for the United Nations, further defines absolute poverty as the absence of any two of the following eight basic needs:[8] Food: Body Mass Index must be above 16. Safe drinking water: Water must not come from solely rivers and ponds, and must be available nearby (less than 15 minutes' walk each way). Sanitation facilities: Toilets or latrines must be accessible in or near the home. Health: Treatment must be received for serious illnesses and pregnancy. Shelter: Homes must have fewer than four people living in each room. Floors must not be made of dirt, mud, or clay. Education: Everyone must attend school or otherwise learn to read. Information: Everyone must have access to newspapers, radios, televisions, computers, or telephones at home. Access to services: This item is undefined by Gordon, but normally is used to indicate the complete panoply of education, health, legal, social, and financial (credit) services.

For example, a person who lives in a home with a mud floor is considered severely deprived of shelter. A person who never attended school and cannot read is considered severely deprived of education. A person who has no newspaper, radio, television, or telephone is considered severely deprived of

information. All people who meet any two of these conditions for example, they live in homes with mud floors and cannot read are considered to be living in absolute poverty. [edit] Relative poverty See also: Income inequality and Relative deprivation

A measure of relative poverty defines "poverty" as being below some relative poverty threshold. For example, the statement that "households with an accumulated income less than 60% of the median equivalized household disposable income are living in poverty" uses a relative measure to define poverty. In this system, if everyone's real income in an economy increases, but the income distribution stays the same, then the rate of relative poverty will also stay the same.

Relative poverty measurements can sometimes produce odd results, especially in small populations. For example, if the median household in a wealthy neighborhood earns US$1 million each year, then a family that earns US$100,000 would be considered poor on the relative poverty scale, even though such a family could meet all of its basic needs and much more. At the other end of the scale, if the median household in a very poor neighborhood earned only 50% of what it needs to buy food, then a person who earned the median income would not be considered poor on a relative poverty scale, even though the person is clearly poor on an absolute poverty scale.

Measures of relative poverty are almost the same as measuring income inequality: If a society gets a more equal income distribution, relative poverty will fall. Following this, some argue[who?] that the term relative poverty is itself misleading and that income inequality should be used instead.[citation needed] They point out that if society changed in a way that hurt high earners more than low ones, then relative poverty would decrease, but every citizen of the society would be worse off. Likewise in the reverse direction: it is possible to reduce absolute poverty while increasing relative poverty.

The term relative poverty can also be used in a different sense to mean "moderate poverty" - for example, a standard of living or level of income that is high enough to satisfy basic needs (like water, food, clothing, shelter, and basic health care), but still significantly lower than that of the majority of the population under consideration.

There is a distinction between absolute poverty indices and relative poverty indices. Relative poverty indices are also known as inequality indices. Poverty line is thus measured in terms of absolute poverty. Absolute poverty line can be lower than the lowest income and higher than the highest income.

There are no restrictions placed on it. This line is conceptually extraneous to the distribution of income. Even in some approaches the distribution may be used for determining its magnitude. It must also be remembered that poverty in the ultimate analysis is a relative concept. It is era-relative as well as society specific. Poverty line differs from era to era, and also from area to area, and country to country. This is so because of the different development levels and the consumption baskets. Even when we determine poverty line on a single criterion, poverty lines will be different for different states and communities. The planning commission in India, during the late seventies considered a poverty line and a modest (reduced) poverty line.

Distinction and change There are also distinctions between the line of poverty of primary poverty and the line of secondary poverty, or between poverty line and distribution line, or between poverty line and hunger line. Since the size and consumption of the households do vary significantly, poverty line can be defined in terms of a person or a household. Different poverty lines can be fixed for different categories of households depending on their size in terms of the number of members. In India, only per capita household poverty line is used for measuring the extent of poverty, and also household poverty line for identifying the poor households.

Poverty line is considered in terms of private final consumption expenditure or disposable income. It is not discussed in terms of wealth or standard of living. In any given span of time there exists an absolute core of minimum living which everybody should enjoy. But then the question is what constitutes this minimal core? It is said that more money can enable an individual or a household escape from the poverty trap. In fact, there are a number of approaches for determining the poverty line.

In all these approaches, the first step is the determination of minimal basket of goods and services. Quite often this basket is broken into (a) food basket, and (b) non-food basket, and we consider only the food basket. The next step is to work out the cost of the food basket, and the third step is to merge the cost of the food basket into total private consumption expenditure or income which is regarded as the poverty line. In this regard, there are some specific approaches that claim to have some scientific basis.

There are five such approaches: 1.Minimum Necessary Approach; 2.Minimum Sufficiency Approach; 3.Distribution Threshold Approach; 4.Committed Consumption Approach; and 5.Stated Minimum Approach. All these approaches are based on the cost of the required food basket.

In India, so far the poverty line is measured only in terms of the food basket as per the standards laid down in 1998 according to which, an urban family (of five) earning Rs.2200 per month or less and a rural family (of five) earning Rs.1650 or less is poor. The new standards of the Planning Commission would consider more parameters than only the sufficient food basket for assessing poverty. Earlier a family was called poor if did not have the required income to buy sufficient food containing a minimum number of calories (2100 for urban areas and 2400 for rural areas) per day. Now, the minimum income required to rise above the poverty line, apart from food, would also depend on expenditure on education and health.

There will be no distinction between urban and rural households as far as the calorie intake is concerned. According to the new standards, the monthly incomes, both of the urban and rural areas, will be raised respectively to Rs. 3000 and Rs.2250. The new poverty estimate would not change the urban poverty figure but for rural India, the number of poor would increase from 28.3 per cent to 41.8 per cent. As many as 372 million Indians will be categorized as poor. It means that additional 97 million people would be classified as poor. The basic reason as to why this new estimation would be done is to go ahead with the overall development of the rural India essentially in terms of food, education, and health facilities.

As we have seen this revised measurement of poverty will surely increase the number of people below the poverty line, but there is a silver lining too in terms of the provision of subsidized food, education and health facilities to the poor to ameliorate their lot. But what is the guarantee that the benefits would surely reach the real and deserving poor of the country? There are in fact many non-friendly

barriers that would obstruct the percolation of these benefits. The Government has to take strict measures to see that these barriers are not able to obstruct the whole process.