What is the difference between the absolute and relative concepts of poverty? What are the major problems in measuring poverty with them?
The absolute concept of poverty is the more optimistic definition of poverty; if a person falls short of a minimum standard of living, he or she is poor. The relative concept of poverty holds that a person is poor if that person falls too far below the average income.
The absolute measure is easy to state but it is arbitrary. Further, it is not clear who should determine the exact point of the poverty line. The standard of living has changed over time and is different between countries. Economists generally agree that different times and places require different poverty lines; they don't all agree on where those lines should be.
The relative concept of poverty is based on the idea that poverty is culturally, not physiologically, determined. In this view, one is poor if because of poverty he or she does not have access to a wide variety of goods or services. If one adopted the absolute concept of poverty, it would be theoretically possible to eliminate poverty through growth and redistribution. If one adopted the relative concept of poverty, it probably would be impossible ever to eliminate poverty.
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