Relative poverty

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The Relative Poverty Measure is often used to examine poverty in more developed countries. It measures the extent to which a household's financial resources fall below an average income threshold for the economy. [1] Unlike the absolute poverty measure which examines those living below conditions essential to human life the relative measure is more loosely defined. It primarily is driven by inequality, often examining the lowest percentage of the population in terms of income[2]. Since many relative measures are percentage based poverty in the relative sense exists unless there is perfect equality.

This measure of poverty is based upon the income distribution of a country and measures you against your neighbors. If a country has a median income of $50,000, then an individual earning $50,000 is just as well off as their neighbors. However, if the median income is $100,000 and someone is making $50,000 then they are considered poor even though they may have enough money to cover their expenses.

Relative poverty measures are important to consider, as some people require more money and resources to achieve the same quality of life as the average person (the elderly, the disabled, etc.). Relative poverty measures then can be used in designing policy to address these inequalities, such as disability insurance or Medicare.

Relative Poverty in the United States

Most Americans consider poverty to be having serious material hardships: homelessness, hunger, or malnutrition. However, the vast majority of those identified as poor by the annual census report did not experience significant material deprivation. this disconnect between perception and actuality arises because of the media, which depicts the Census Bureau’s tens of millions of poor people as chronically hungry and malnourished, homeless or barely hanging on in overcrowded, dilapidated housing. The strategy of the media is to take the least fortunate 3 percent or 4 percent of the poor and portray their condition as representative of most poor Americans. [3]

References

  1. http://tutor2u.net/economics/content/topics/poverty/measuring_poverty.htm
  2. http://economistsview.typepad.com/economistsview/2011/06/relative-poverty.html Kenworthy, Lane. "Relative Poverty." Economist's View. N.p., 06/06/2011. Web.
  3. Rector, Robert. "Strange Facts about America's 'Poor' National Review Online. 13 Sept. 2011. [1]
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