Course: Economics - Essay on Absolute and Relative Poverty Concepts

This economics essay delves into the multifaceted concept of poverty, differentiating between absolute and relative poverty. Absolute poverty is defined as the inability to meet basic living conditions, while relative poverty is measured in comparison to a set median income within a specific geographical context. The essay highlights the intertwined nature of these concepts, particularly in relation to capabilities and the measurement of economic needs, and the essay also touches on the perspectives of economists like Sen and Deaton. The essay emphasizes that while absolute poverty is a generalized concept, relative poverty offers a more targeted approach by comparing personal income to a standard set within a given context. Ultimately, the essay aims to provide a comprehensive understanding of how absolute and relative concepts attempt to explain economic deprivation and survival levels.

Poverty Concepts 1
Economics Essay: Poverty
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RELATIVE AND ABSOLUTE POVERTY CONCEPT
Predominantly, poverty refers to a given level of economic deprivation. There are various
measures of poverty thus making poverty a multi-dimensional concept. Noteworthy, absolute
poverty denotes a situation whereby a person’s income is unable to sustain basic living
conditions .Essentially, basic living conditions include access to housing food and shelter.
However, relative poverty refers to a situation whereby a person’s income is below a certain set
median incomes (Pettinger2017).Whereas absolute poverty is the same globally, relative poverty
differs from country to country (Economic online 2017).The definition of relative poverty in the
United State of America is different from the one in India due to the different median income
rate. Relative poverty is measured using a standard percentage of median income which is set
differently as per different economies. Primarily, the basis for relative poverty levels is the
income measure (Sen 2013).The desire to measure poverty according to minimally accepted
standards has led to the absolute and relative poverty concepts among other multidimensional
approaches to poverty (Bourgignon & Chakravarty 2003).
According to Sen “despite the unanimity in favor of relative as opposed to an absolute view
of poverty, there is good case for an absolutist approach”., goes to show the preference of
relative poverty as opposed to(Sen 1983).Essentially, absolute and relative conceptualization of
poverty is intertwined when it comes to capabilities. This is because absolute poverty adopts a
relative approach when it comes to resources, commodity and income approach to measuring
poverty (Sen 1983).Essentially, relative poverty is a measure of a person’s income as compared
to an average standard of income in a given level thus the assertion that relative poverty is more
specific geographically (Deaton 2005).Typically, both relative and absolute approaches to
poverty are concerned as to the level of satisfaction of economic needs in terms of income and

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capabilities. However, under relative poverty, income and capabilities measures are approached
differently from an absolute point of view .Usually absolute poverty is more of an individual
measure as opposed to a social measure .However, relative poverty concept is more of a social
measure of the economic livelihood of a person in comparison to other persons in the same
context.
Predominantly, absolute poverty is a generalized idea of as to what poverty is whereas
relative poverty is a more targeted approach to poverty due to the fact that is a comparison of
personal income against a standard set in a given concept. All in all, relative and absolute
concepts try to explain deprivation and survival levels from an economic point of view.

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References
Bourguignon, F & Chakravarty, R.S. (2003).The measurement of Multidimensional poverty.
Ophi.UK .Journal of Economics Inequality, Apr 2003:1.Available at http://www.ophi.org.uk/wp-
content/uploads/Bourgignon-Chakravarty-2003.pdf[Accessed 20 May 2018]
Deaton, A.S. (2005).Measuring poverty in a growing world, Review of Economics and
Statistics,87,1-19.Accessed on 20 May 2018]
Pettinger, T. (2017).Definition of absolute and relative poverty. Economics Help.
[Online].Available at https://www.economicshelp.org/blog/glossary/definition-of-absolute-and-
relative-poverty/[Accessed 20 May 2018]
Sen, A. (1983).Poor, relatively speaking.Berkeley.Edu. [Online].Available
athttps://are.berkeley.edu/courses/ARE251/fall2008/Papers/sen83.pdf[Accessed 20 May 2018]
Sen, A. (2006).Conceptualizing and measuring Poverty.Univie.Ac. [Online].Available at
http://homepage.univie.ac.at/fanny.mueller-uri/php/inequalities/wp-content/uploads/2013/10/
Sen-Amartya-Conceptualizing-and-Measuring-Poverty.pdf[Accessed 20 May 2018]