Absolute Poverty Definition | 8 Causes and 3 Examples | BoyceWire
Absolute Poverty Definition

Absolute Poverty Definition

Absolute Poverty Definition
Causes and Examples

WRITTEN BY PAUL BOYCE | Updated 22 September 2020

What is Absolute Poverty

Absolute poverty is the state by which an individual is unable to meet their immediate needs. In other words they are unable to obtain basic needs such as shelter, water, food and warmth. It contrasts with relative poverty, which is where individuals are poor by comparison to other members of society.

The World Bank uses absolute poverty as its default definition of ‘poverty’. This is to distinguish a uniform measure of poverty throughout the world and identify serious cases of poverty. For instance, someone in the US would have to earn less than $13,000 per year to fall into relative poverty. However, that works out at $35 per day, well in excess of the $1.90 threshold that the World Bank sets to define absolute poverty.

The terminology of absolute poverty only covers basic needs. We may often hear that poverty is at an all-time high or poverty is increasing. However, this often refers to relative poverty which is based on average income levels of a nation. By contrast, absolute poverty refers to the absence of any human needs such as food or water – think of Sub-Saharan Africa for example.

Key Points
  1. Absolute poverty is defined by the World Bank as having an income below $1.90 per day.
  2. Absolute poverty differs from relative poverty in the fact that those in absolute poverty are unable to meet their daily needs of food and water. Those in relative poverty are poor in comparison to the rest of the country.

Causes of Absolute Poverty

When we talk of absolute poverty, we may associate it with under-nourished people from third world nations such as Sudan. This is very different from the relative poverty we see in developed nations such as the US, where the poor still have access to food, water, and shelter. As such, the causes are very different and generally apply to poorer nations that have an absence of investment and infrastructure.

1. Inadequate Access

Inadequate access is particularly prevalent in first and developing world nations. Simply put, it is difficult to find food, water, or shelter. This disproportionately affects those who live in rural areas. They live far away from civilisation, so face greater challenges to satisfy their basic needs.

For instance, the nearest store may be miles away, if not, non-existent. Some rural communities are self-reliant and therefore do not earn a wage but are self-dependant. In turn, this can result in absolute poverty if they are unable to source their immediate needs.

2. Availability of Jobs

In the developed world, the welfare state has largely prevented the lack of available jobs causing absolute poverty, even though if it may lead to relative poverty.

With that said, many countries through Africa and the rest of the developing world have faced years of colonialism and plunder. Without private property rights, many of the resources have been depleted. Businesses are few and far between and foreign investment is discouraged by corrupt regimes. This restricts the amount of job creation, meaning individuals have to solely rely on themselves for their basic needs.

3. Inadequate Advances in Agriculture

Part of the case of absolute poverty is simply the lack of advancement in agriculture. If we look at developed nations today, their development stems from such advances that allowed workers to move away from subsistence living. Instead, there was more than enough food to go around, allowing workers to produce other goods and services within the economy.

As farmer’s output increase, there was too much competition and supply, and not enough demand. The nation’s people were well supplied for, which drove farmers out of the market. Yet it created new avenues for employment, as basic needs were met and workers were freed from toiling the farm.

These advancements in agriculture were driven by increasing levels of education, strong private property rights, and an ease of doing business. Factors that are lacking in many developing nations. As a result, a nation that is unable to sufficiently feed itself is going to face greater levels of absolute poverty.

4. Movement of Industry

As industries come and go, so too do the jobs they create. We have now moved towards a post-industrialised society whereby we rely on services rather than manufacturing and production. As a result, we have seen towns and cities that relied on such industries to become economically destroyed.

Factories closed and industry shifted towards services and the metropolitan area. Those who were left behind created a life around their skills and expertise in industries such as manufacturing. The new reality is that millions have been left without work as a result.

For many, it is incredibly difficult to move to where jobs are more plentiful, particularly in older age. In many cases, we see people living in absolute poverty due to the absence of jobs. Unable or unwilling to move, they are left to face an existence with a souless local economy.

5. Conflict

War has historically been one of the leading causes of absolute poverty. It destroys capital, trade, investment, and supply chains. If we look at World War Two, it was the costliest war in history. Millions starved particularly Russians in the siege of Leningrad.

Even in small scale conflicts in Africa, wars led to plunder and destruction. For instance, natural resources are depleted and irrecoverable as property rights are abused or are non-existant. This leads a nations people with little in the way of natural resources or a source of income. The very source by which they could achieve a sustainable source of income has been destroyed through years of war and plunder.

6. Poor Education

A nation that is poorly educated is unable to read or write, so communication becomes that much more difficult. Even in well educated nations such as the US, over 4 percent of the population cannot read or write.

Without such basic skills, it is virtually impossible to find a job in a developed nation. Even in a developing nation such as India, the necessity to even read and write can be the difference between absolute poverty or a comfortable life.

A report from UNESCO concludes such. It stated that world poverty would be cut in half if all adults completed secondary education.

The UNESCO report joins a number of other studies that have highlighted the link between education and poverty, but what is the logic behind this?

An education is not necessarily just reading and writing; although it is a major part. It is also about learning new ideas, and techniques that can help with everyday life. As such, an education can help specifically with certain skills. For instance, geography and the sciences may assist with agriculture. Or, they may learn specifically about agricultural techniques – it assists a nations people to become more productive and efficient.

7. Lack of Infrastructure

Without roads, hospitals, railways, and the like the value of a persons output can be significantly handicapped. For instance, a farmer may be able to produce far in excess of their own consumption.

They are then able to sell some at market. However, without the accessibility of roads and motroways, they are unable to do such. The nearest market may be 10 miles away, which is easily drivable, but a far more strenuous walk with a cart load of produce. This presents a significant barrier that would otherwise allow the farmer a better way of life.

Furthermore, the lack of schools means the ability to educate the population is reduced. As discussed before, a lack of education has been proven to correlate with lower levels of poverty. Those who cannot read adn write find it harder to capture and pass on information and knowledge, which stems economic advancement.

8. Mental Health

Mental health issues can be attributable to much of the poverty in both the developed world, but also the developing world. It can impact on a person’s ability to work more than others, with varying degrees of severity. For instance, it may impact an individual’s ability to undertake everyday tasks, thereby presenting a need to rely on others.

Without the right help, many are left to struggle through. They may be unable to meet the work standards required or even get out of bed in the morning. As a result, it may lead to a life without employment – creating a higher risk of falling into absolute poverty.


Absolute Poverty Examples

Homelessness

For one reason or another, both those in developed and the developing world end up homeless. Generally, the most cited reasons are mental health problems, and drug abuse, or a combination. Either way, those who are homeless are inevitably more likely to suffer from absolute poverty.



Homeless people are extremely vulnerable, particularly due to the prevalence of mental health difficulties. For instance, statistics in the UK show that mental health illness among the homeless is as high as 80 percent.

When individuals have difficulties in the daily activities of life, they may be unable to get out of bed or even feed themselves. What we see as a result is the inability to work, and consequently, a decline into absolute poverty.

Disabled

A disability can range from severely debilitating to mildly, each with a different impact on an individual’s ability to work or find work. In the extreme, someone who has lost their arms and legs faces an almost impossible task of finding work.

What we see as a result is that those with a disability have a greater risk of falling into absolute poverty. First of all, they can be significantly limited in the jobs they can take. For instance, any form of manual labour is out of the question for someone without arms.

Second of all, they may face discrimination. Firms must make the necessary arrangements to cater for the disabled, which can impose additional cost. We also see a level of stigma that questions their productivity.

All of this makes in more difficult for disabled individuals to obtain a job. In turn, this negatively impacts on their chances of falling into absolute poverty.

South Sudan

South Sudan has one of the highest rates of absolute poverty in the world, at around 80 percent.

The reason being the constant wars the nation has faced; both civil and regional.

It has faced constant destruction over many decades, which has inevitably destroyed what existing capital the country had. People have to live in fear of their life, with food, roads, and water cut off for many.


Absolute vs Relative Poverty

Absolute poverty refers to a situation by which the individual is unable to meet their basic needs such as food and water. The World bank quantifies this by using a $1.90 per day threshold. This is worked out using Purchasing Power Parity.

In other words, it is adjusted for local costs. So a Big Mac in Indonesia is going to be much cheaper than that of the US. Therefore, it works out the exchange rate between currencies as well as the differences in the average cost of living.



By contrast, relative poverty is generally defined as 60 percent of the median or average income. In other words, it simply looks at the relative income compared to the rest of the nation.

Therefore the main difference can be seen as a biological and existential need in absolute poverty, compared to the relative financial income against others in relative poverty.


General FAQs on Absolute Poverty

What is meant by absolute poverty?

Absolute poverty is defined as the state whereby a person is unable to satisfy their basic needs such as food, water, shelter, and warmth.

What is absolute and relative poverty?

Absolute poverty is where an individual is unable to meet their basic needs, which the World Bank defines as an income of less than $1.90 per day. By contrast, relative poverty is generally measured as an income that falls below 60 percent of the median income of the nation.

What are the 3 types of poverty?

There are three main types of poverty: absolute, relative, and situational.




Further Reading


Moral Hazard Definition Moral Hazard Definition - A Moral Hazard is where an individual becomes more reckless when they know the effects will be borne by another…

Moral Hazard Definition Read More »

Price Ceiling Definition Price Ceiling Definition - A price ceiling is the maximum amount a producer can sell their good or service for. This is usually mandated…

Price Ceiling Definition Read More »

Budget Surplus Definition Budget Surplus Definition - A budget surplus is where government brings in more money than it spends. In other words, it receives more in…

Budget Surplus Definition Read More »