For a country to tackle poverty, step 1 is identifying “the poor”.
This happens through a ‘Poverty Line’, which acts a measure to whether your policies to “alleviate poverty” have really been working. Each country is free to decide how to draw this ‘Poverty Line’.
In poor countries, a “poor” person is someone who wouldn’t be able to afford the basic necessities for what would be considered “a minimum standard of living”. Developed nations set the bar a bit higher. They use income to measure whether you can purchase goods and services that provide a minimum welfare level.
By cross-referencing “income” and “consumption” in a currency and equivalently across countries, we can compare poverty lines across the world. This is Purchasing Power Parity.
In 2005, the World Bank measured the poverty lines of 15 of the world’s poorest countries and set the International Poverty Line at $1.25 (Rs.90) per person per day. When they revised this in 2015, the new global poverty line became $1.90 (Rs.130). This is the absolute lowest a person in the poorest countries of the world need to survive, and it’s called the ‘absolute poverty’ line. This benchmark helps identify those who are unable to feed and clothe themselves, and popular among countries in South Asia and Sub-Saharan Africa.
On the other hand, the ‘relative poverty’ line is essentially drawn at the average income of the entire population of that country, and factors in their overall wealth distribution. As you can imagine, this measure is opted for in high-income countries like the U.S., U.K. and France, to keep driving up the wealth of the population and to determine portions of their population that feel socially excluded.
The 1st goal of the United Nation’s 2030 Agenda for Sustainable Development is to “eradicate poverty in all its forms and dimensions, including extreme poverty”. While the number of people living in extreme poverty dropped by more than half between 1990 and 2015 – from 1.9 billion to 836 million – too many are still struggling for basic human needs.
Poverty is a multi-dimensional phenomenon. Only after considering all forms of poverty can it be actually identified, targeted and truly eradicated. Like we said, for a country to tackle poverty, step 1 is identifying “the poor” correctly.