Poverty Assessment

Quantitative Approaches

Conventionally, poverty has been largely defined in terms of income or expenditure based on the assumption that a person's or household's material standard of living largely determines her well-being. The poor are then identified as those with a material standard of living below a certain level or poverty line. Where this level is set determines how many people are poor and how many are not, itself a rather subjective process.

Nevertheless, institutions dealing with the alleviation of poverty, such as the World Bank and the United Nations, regularly utilize the poverty threshold. Since countries and regions within a country differ in terms of their standard of living, most experts agree that the poverty threshold must be set at different levels depending, among other things, on the specific country, region, and urban/rural location.

An absolute definition of poverty assumes that it is possible to define the basic needs of the generic individual regardless of one's physical location in the world, based on the minimum standard of living and one's physiological needs for water, clothing, and shelter. In contrast, the relative approach defines poverty in relation to a generally accepted standard of living in a specific society at a specific time.

An advantage of the absolute approach is that there are some reasonably objective norms that could be applied to peoples and societies worldwide and thus allow for cross-country comparisons of poverty rates, while with the relative approach the decision of what is an acceptable minimum standard of living can be subjective and depend on the societal and personal norms of the researcher.

Systematic poverty assessment techniques have been in place since the 19th century. In 1899 a study of poverty in the city of York, England, primarily used a quantitative approach, relying on household income and expenditure surveys. Today, cross-country comparisons of poverty are done by comparing the relative median incomes of households on what the World Bank economists have devised as the purchasing power parity (PPP) level, and by comparing the percentages of the total number of households in a given country living under poverty. In 2000, for example, based on various survey studies worldwide, the World Bank estimated that over 25 percent of the population of the developing world lived below the poverty line of $1 per person per day on the PPP basis.

...