4.2.1 Absolute and relative poverty

• What is absolute poverty?

  When a household does not have sufficient income to sustain even a basic acceptable standard of living and to meet people’s essential, core needs
• When does absolute poverty occur?

  • When a person has insufficient resources to meet basic human needs 
• What is relative poverty?

  • Measure of poverty 
  • When household income is considerably lower than the median income within a country
  • Less than 60% of the median income
• What are causes of absolute poverty?

  • Low and unstable household incomes
  • Absence of financial/welfare safety net
• What is the Palma ratio?

  Share of all income received by the 10% people with the highest disposable income divided by the share of all income received by the lowest 40% of people with the lowest disposable income
• What are measures of poverty?

  • Absolute poverty
  • Relative poverty 
  • United nations human poverty index
  • Ratio methods 
• What are causes of changes in absolute and relative poverty?

  • The level of indebtedness
  • The level of unemployment
  • Heath and education
  • Access to public services
  • The state of the economy and real incomes
  • Distribution of income