What Is the Difference Between Absolute and Relative Poverty?
Delve into the core distinctions between different approaches to defining and measuring poverty's impact on society.
Poverty is a complex socio-economic challenge impacting individuals and communities globally. It is not a singular condition but can be understood and measured through various lenses. Grasping the distinct ways poverty is conceptualized and quantified is important for accurate analysis and meaningful discussions about societal well-being.
Absolute Poverty Defined
Absolute poverty describes a severe deprivation of fundamental human needs, such as food, safe drinking water, sanitation, health services, shelter, education, and information. This measure establishes a fixed, universal standard, meaning individuals below this threshold lack resources for basic survival, regardless of location or societal wealth.
Measurement often relies on a specific income threshold, like the international poverty line set by the World Bank. As of June 2025, this line is $3.00 per person per day, based on 2021 purchasing power parities. This global benchmark identifies those living in extreme deprivation, reflecting the minimum income needed to meet essential needs in the world’s poorest countries. It focuses on the bare minimum required to sustain life.
Relative Poverty Defined
Relative poverty refers to a standard of living below the average or median income within a society. This definition acknowledges that poverty involves exclusion from typical living patterns and opportunities, not just lacking basic necessities. Its measurement is context-dependent, varying based on local economic conditions and social norms.
This poverty is typically defined as a percentage of the median household income, often 50% or 60%. An individual may experience relative poverty even if they can afford basic food and shelter, if they cannot participate in common social, cultural, or recreational activities prevalent in their community.
Comparing Absolute and Relative Poverty
The fundamental difference between absolute and relative poverty lies in their underlying standards and focuses. Absolute poverty uses a fixed, universal threshold focused on severe deprivation of basic human needs for survival. This standard remains the same everywhere, regardless of the economic environment.
Relative poverty, conversely, uses a variable, societal-dependent threshold. It emphasizes income inequality and social exclusion, focusing on whether an individual’s resources allow them to maintain a standard of living comparable to the majority. Thus, a person could be relatively poor in a wealthy country, even if not absolutely poor by global standards.
Regarding measurement, absolute poverty is gauged against a global or national minimum income. This metric allows for cross-country comparisons of extreme deprivation. Relative poverty is measured as a percentage of a society’s median income, reflecting wealth distribution within that population.
The application and context of these concepts also differ significantly. Absolute poverty is often more pertinent in developing countries, where large segments of the population struggle to meet basic survival needs. Relative poverty is more commonly discussed and analyzed in developed countries, where basic needs are generally met for most, but significant disparities in living standards persist.
The potential for change over time distinguishes these two forms of poverty. Absolute poverty can theoretically be eradicated if all individuals achieve an income above the minimum survival standard. However, relative poverty will always exist as long as there is any degree of income inequality within a society, as it is defined by a comparison to the prevailing average.