Poverty line

The poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. People who have an income below the poverty line have no discretionary disposable income, by definition.

Related Topics:
Income - Poverty - Disposable income

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

It is widely discussed how and where to set the poverty line. In practice, different countries often use different poverty lines. Globally, however, it is more common to use only one poverty line in order to compare economic welfare levels. When comparing poverty across countries, the purchasing power parity exchange rates are used. These are used because poverty levels otherwise would change with the normal exchange rates. Thus, 'living for under $1 a day' should be understood as having a daily total consumption of goods and services comparable to the amount of goods and services that can be bought in the US for $1. Notice that e.g. self-produced goods and public services are included in this.

Related Topics:
Purchasing power parity - Public service

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Almost all societies have some of their citizens living in poverty. The poverty line is useful as an economic tool by which to measure such people and consider socioeconomic reforms such as welfare and unemployment insurance to reduce poverty.

Related Topics:
Welfare - Unemployment insurance

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Determining the poverty line is often done by considering the essential resources that an average human adult consumes in one year and then summing their cost. This approach is needs-based in that an assessment is made of the minimum expenditure needed to maintain a tolerable life. This was the original basis of the poverty line in the United States, which has since been uprated for price changes. In developing countries, the largest of these resources is typically the rent required to live in an apartment, so historically, economists have paid particular attention to the real estate market and housing prices as having a strong influence on the poverty line.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Individual factors are often used to handle various circumstances, such as whether one is a parent, elderly, a child, married, etc.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~