8.2.3—Absolute vs relative poverty

Absolute poverty means lacking resources to meet a defined minimum standard of basic needs. Relative poverty means having substantially fewer resources than the typical or median household in the society.

Absolute measures track purchasing power against a threshold that may be updated; relative measures reflect participation and inequality within a society. A person can move above an absolute line while remaining relatively poor if others’ incomes rise faster.

If a household’s real income doubles but the median income triples, absolute hardship may fall while its relative position worsens.

Neither measure alone captures every dimension of deprivation, and “poor” is not determined only by a single income number.