Types of Poverty Lines
- The relative poverty line:
- is simply a cut-off point.
- It may be the point in the welfare distribution below which a specified proportion lie, or it may be the proportion of population that lie below half of the median income.
- The relative poverty line is both transparent and simple to calculate, but it is not comparable across regions with different income levels, nor it permit ready comparison over time.
- An absolute poverty line:
- Is linked to a minimum welfare level necessary for life as a human being.
- Defining the poverty line in this way allows comparisons to be made over time or across groups, as it would guarantee that two individuals irrespective of where they live are treated in the same way. Once the welfare level distinguishing the ‘poor’ from the ‘non-poor’ is defined, monitoring poverty over time also becomes possible.
- A subjective poverty line :
- Is defined in terms of the minimum level of income that a person feels is required to meet his/her basic needs.
- This approach leads to different poverty lines for people in different regions and for the same people over time but with the same level of welfare.
- This is because the minimum level of income perceived as being required to meet basic needs may differ between people in different areas and for the same people over time.