Difference Between Absolute and Relative Poverty (With Table)

Many countries or groups of people are impoverished as they cannot afford necessities like proper food or hygienic living conditions.

However, poverty can be understood in two different types. The two main types are Absolute and Relative Poverty. There are many differences between the two.

Absolute vs Relative Poverty

The main difference between Absolute and Relative poverty is that Absolute poverty is when a person does not have enough money to survive a basic lifestyle. On the other hand, Relative poverty is when a person can afford necessities but has a low standard of living.

Absolute poverty can happen because of many factors like debt, unemployment, natural disasters, etc. A country’s economic growth has very little or no effect on a person’s absolute poverty. The person who can’t afford food won’t be able to afford it even if the country’s economy increases.

Relative poverty is when a person or a household has all the necessities for life. However, the overall lifestyle and standard of living are not up to the mark of other households in the same area. Relative poverty can also be called “Relative deprivation.” It can happen because of unemployment, diseases, pay inequality, etc.

Comparison Table Between Absolute and Relative Poverty

What is Absolute Poverty?

Absolute poverty is known as “Extreme poverty” or “Adject poverty.” People from countries that face absolute poverty cannot have things like food, clean water, sanitary living conditions, or even education for children.

Absolute poverty can happen mainly because of very low income or no income. Since the person facing absolute poverty has an extremely low source of income, they cannot afford all necessary survival items.

In such conditions, children in such households can’t afford education, and due to the lack of education, they grow up illiterate. It further leads to meager income, and thus, the cycle continues. Other than income, another reason that can impact the level of absolute poverty is access to essential goods and services.

There are several methods, like implementing mandatory education and providing employment opportunities, that can lead to an increase in the level of income. It, in turn,, will decrease the absolute poverty of any nation.

What is Relative Poverty?

Relative poverty, as the name suggests, is the calculation of the standard of living of one person in relativity to the standard of living of another person who lives in the same locality or region. Relative poverty is when a person can afford basic things but cannot afford things that a person from the upper class has.

A household that cannot afford luxury when their neighbors can are said to be poor. Relative poverty happens with the lower middle class or middle class relative to the upper-middle class or upper class.

Relative poverty can happen due to issues like low income or inflation. When both causes are combined, it can lead to a huge gap in the standard of living of the middle class and upper classes standards of living.

It is not impossible to get rid of relative poverty. It is possible to reduce the gap if the inflation in the country reduces, and people can afford things without any reservation.

Main Differences Between Absolute and Relative Poverty

1. Absolute poverty is when a household can not afford even the necessities of life. On the other hand, relative poverty is when a household can afford basic things but cannot afford luxury commodities.
2. Absolute poverty mostly prevails in developing nations. Whereas Relative poverty majorly prevails in developed countries.
3. It is impossible to eradicate absolute poverty. While eradicating relative poverty is quite possible if necessary measures are taken.
4. The standard of living under absolute poverty remains consistent over time. On the other hand, it is possible to change the standard of living under relative poverty over time.
5. Absolute poverty is to be measured only with the help of the poverty line. However, measurement of relative poverty cannot be done with the use of the poverty line; It has to be measured by using the Gini-coefficient and Lorenzo Curve only.
6. People in Absolute poverty are below the poverty line. At the same time, people in Relative poverty can be on the poverty line and even, in some cases above the poverty line.

Conclusion

Lack of education and employment can give rise to low income. Hence, it can further lead to absolute poverty. Relative poverty can happen in two ways. It can happen voluntarily when a person has income sources but does not stay up to the standard of those around him.

It can also happen involuntarily when a person wishes to have a high standard of living but does not have the resources to do so.

References

1. https://www.jstor.org/stable/116944
2. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1475-4991.2011.00443.x