Editing Poverty threshold (section)

==Relative poverty==
{{See also|Economic inequality|Relative deprivation}}
{{split section|Relative poverty|date=September 2020}}
[[File:Income_percentiles,_with_median_and_relative_poverty_levels_marked.png|thumb|The blue bars represent the amount of money made by different people. The thin red line shows the relative poverty level. Anyone earning less than that, in this society, is relatively poor.]]
Relative poverty means low income relative to others in a country:<ref name="Eskelinen 2011 942–943">{{cite book |doi=10.1007/978-1-4020-9160-5_182 |chapter=Relative Poverty |title=Encyclopedia of Global Justice |year=2011 |last1=Eskelinen |first1=Teppo |pages=942–943 |isbn=978-1-4020-9159-9 }}</ref> for example, below 60% of the median income of people in that country.

Relative poverty measurements, unlike absolute poverty measurements, take the social economic environment of the people observed into consideration. It is based on the assumption that whether a person is considered poor depends on her/his income share relative to the income shares of other people who are living in the same economy.<ref name="Eskelinen 2011 942–943"/> The threshold for relative poverty is considered to be at 50% of a country's median equivalised disposable income after [[Transfer payment|social transfers]]. Thus, it can vary greatly from country to country even after adjusting for [[Purchasing Power Standard|purchasing power standards]] (PPS).<ref>{{cite book |doi=10.2785/39876 |quote-page=8 |quote=In 2016, median equivalised net income varied considerably across the EU Member States |year=2018 |author1=European Commission. Statistical Office of the European Union |title=Living conditions in Europe |publisher=Publications Office |isbn=978-92-79-86498-8 }}</ref>

A person can be poor in relative terms but not in absolute terms as the person might be able to meet her/his basic needs, but not be able to enjoy the same standards of living that other people in the same economy are enjoying.<ref name="habitatforhumanity.org.uk">{{cite web|url=https://www.habitatforhumanity.org.uk/blog/2018/09/relative-absolute-poverty/|title=Relative vs Absolute Poverty: Defining Different Types of Poverty|date=6 September 2018|website=Habitat for Humanity GB|language=en-GB|access-date=26 April 2020}}</ref> Relative poverty is thus a form of [[social exclusion]] that can for example affect peoples access to decent housing, education or job opportunities.<ref name="habitatforhumanity.org.uk"/>

The relative poverty measure is used by the [[United Nations Development Program]] (UNDP), the [[UNICEF|United Nations Children's Fund]] (UNICEF), the [[Organisation for Economic Co-operation and Development]] (OECD) and Canadian poverty researchers.<ref name="Raphael2009">{{cite journal |journal=Canadian Journal of Nursing Research |volume=41 |number=2 |date=June 2009 |title=Poverty, Human Development, and Health in Canada: Research, Practice, and Advocacy Dilemmas |pages=7–18 |first1=Dennis |last1=Raphael |pmid=19650510 |url=https://cjnr.archive.mcgill.ca/article/download/2189/2183/0 }}</ref><ref name="Innocenti2005">{{cite report|publisher=[[UNICEF#Innocenti Research Centre|Innocenti Research Centre]]|year=2005|title=Child poverty in rich nations: Report card no. 6}}</ref><ref name="OECD2008">{{cite web |website=Organisation for Economic Co-operation and Development |year=2008 |title=Growing unequal? Income distribution and poverty in OECD countries |url=https://www.oecd.org/els/soc/growingunequalincomedistributionandpovertyinoecdcountries.htm}}</ref><ref name="UNDP2008">{{cite report|publisher=United Nations Development Program|year=2008|title=Human development report: Capacity development: Empowering people and institutions|location=Geneva}}</ref><ref name="ConferenceBoard2013">{{cite web|url=http://www.conferenceboard.ca/hcp/details/society/child-poverty.aspx|title=Child Poverty|publisher=Conference Board of Canada|location=Ottawa, ON|year=2013}}</ref> In the European Union, the "relative poverty measure is the most prominent and most–quoted of the EU social inclusion indicators."<ref name="povinequalityCSP">{{cite web|title=How poverty differs from inequality on poverty management in an enlarged EU context: Conventional and alternate approaches|author1=Ive Marx|author2=Karel van den Bosch|publisher=Centre for Social Policy|location=Antwerp, Belgium|url=http://epp.eurostat.ec.europa.eu/portal/page/portal/conferences/documents/34th_ceies_seminar_documents/34th%20CEIES%20Seminar/1.1%20%20I.%20MARX.PDF}} {{dead link|date=March 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

"Relative poverty reflects better the cost of social inclusion and equality of opportunity in a specific time and space."<ref name=relativeBradshawInnocenti2012>{{cite journal |last1=Bradshaw |first1=Jonathan |last2=Chzhen |first2=Yekaterina |last3=Main |first3=Gill |last4=Martorano |first4=Bruno |last5=Menchini |first5=Leonardo |last6=de Neubourg |first6=Chris |title=Relative Income Poverty Among Children in Rich Countries |journal=Innocenti Working Papers |date=31 January 2012 |doi=10.18356/3afdf450-en }}</ref>

"Once economic development has progressed beyond a certain minimum level, the rub of the poverty problem&nbsp;– from the point of view of both the poor individual and of the societies in which they live&nbsp;– is not so much the effects of poverty in any absolute form but the effects of the contrast, daily perceived, between the lives of the poor and the lives of those around them. For practical purposes, the problem of poverty in the industrialized nations today is a problem of relative poverty (page 9)."<ref name="relativeBradshawInnocenti2012" /><ref name=UNICEF2000>{{cite report|title=A League Table of Child Poverty in Rich Nations|series=Innocenti Report Card No.1|publisher=UNICEF Innocenti Research Centre|location=Florence, Italy}}</ref>

However, some {{who|date=June 2019}} have argued that as relative poverty is merely a measure of inequality, using the term 'poverty' for it is misleading. For example, if everyone in a country's income doubled, it would not reduce the amount of 'relative poverty' at all.

===History of the concept of relative poverty===
In 1776, [[Adam Smith]] argued that poverty is the inability to afford "not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without."<ref name=AdamSmith1776>{{cite book|author=Adam Smith|title=An Inquiry Into the Nature and Causes of the Wealth of Nations|volume=5|number=22|year=1776|title-link=An Inquiry Into the Nature and Causes of the Wealth of Nations|author-link=Adam Smith}}</ref><ref name=Innocenti2012 />

In 1958, [[John Kenneth Galbraith]] argued, "People are poverty stricken when their income, even if adequate for survival, falls markedly behind that of their community."<ref name=Innocenti2012 /><ref name=Galbraith1958>{{cite book|author=Galbraith, J. K.|year=1958|title=The Affluent Society|publisher=Houghton Mifflin|location=Boston}}</ref>

In 1964, in a joint committee economic President's report in the United States, Republicans endorsed the concept of relative poverty: "No objective definition of poverty exists. ... The definition varies from place to place and time to time. In America as our standard of living rises, so does our idea of what is substandard."<ref name=Innocenti2012 /><ref name=rep1964>{{cite report|title=Minority [Republican] views, p. 46 in U.S. Congress, Report of the Joint Economic Committee on the January 1964 Economic Report of the President with Minority and Additional Views|publisher=US Government Printing Office|location=Washington, D.C.|date=January 1964}}</ref>

In 1965, [[Rose Friedman]] argued for the use of relative poverty claiming that the definition of poverty changes with general living standards. Those labelled as poor in 1995, would have had "a higher standard of living than many labelled not poor" in 1965.<ref name=Innocenti2012>{{cite report|url=http://www.unicef.ca/sites/default/files/imce_uploads/DISCOVER/OUR%20WORK/ADVOCACY/DOMESTIC/POLICY%20ADVOCACY/DOCS/unicefreportcard10-eng.pdf|title=Measuring child poverty: New league tables of child poverty in the world's rich countries|series=UNICEF Innocenti Research Centre Report Card|number=10|author=Peter Adamson|author2=UNICEF Innocenti Research Centre|year=2012|location=Florence, Italy|access-date=19 June 2013|archive-url=https://web.archive.org/web/20130612021633/http://www.unicef.ca/sites/default/files/imce_uploads/DISCOVER/OUR%20WORK/ADVOCACY/DOMESTIC/POLICY%20ADVOCACY/DOCS/unicefreportcard10-eng.pdf|archive-date=12 June 2013}}</ref><ref name=Friedman1965>{{cite report|author=Friedman, Rose. D.|year=1965|title=Poverty: Definition and Perspective|journal=American Enterprise Institute for Public Policy Research|location=Washington, D.C.}}</ref>

In 1967, American economist [[Victor Fuchs]] proposed that "we define as poor any family whose income is less than one-half the median family income."<ref>{{cite journal |id={{ProQuest|1298125552}} |last1=Fuchs |first1=Victor |title=Redefining Poverty and Redistributing Income |journal=The Public Interest |volume=8 |date=Summer 1967 |page=88 }}</ref> This was the first introduction of the relative poverty rate as typically computed today<ref>{{cite journal |last1=Ravallion |first1=Martin |last2=Chen |first2=Shaohua |title=Welfare-Consistent Global Poverty Measures |website=National Bureau of Economic Research |series=Working Paper Series |date=August 2017 |url=https://www.nber.org/papers/w23739 |doi=10.3386/w23739 |ssrn=3027843 |doi-access=free}}</ref><ref>{{cite journal |last1=Foster |first1=James E. |title=Absolute versus Relative Poverty |journal=The American Economic Review |date=1998 |volume=88 |issue=2 |pages=335–341 |jstor=116944 }}</ref>

In 1979, British sociologist, [[Peter Townsend (sociologist)|Peter Townsend]] published his famous definition: "individuals... can be said to be in poverty when they lack the resources to obtain the types of diet, participate in the activities and have the living conditions and amenities which are customary, or are at least widely encouraged or approved, in the societies to which they belong (page 31)."<ref name=Townsend1979>{{cite book|author=Townsend, P.|year=1979|title=Poverty in the United Kingdom|location=London|publisher=Penguin}}</ref>

Brian Nolan and Christopher T. Whelan of the [[Economic and Social Research Institute]] (ESRI) in Ireland explained that "poverty has to be seen in terms of the standard of living of the society in question."<ref name=CallanNolan1993>{{cite journal|last1=Callan|first1=T|last2=Nolan|first2=Brian|last3=Whelan|first3=Christopher T|year=1993|title=Resources, Deprivation and the Measurement of Poverty|journal=Journal of Social Policy|volume=22|issue=2|pages=141–72|doi=10.1017/s0047279400019280|hdl=10197/1061|s2cid=55675120|url=https://researchrepository.ucd.ie/bitstream/10197/1061/3/nolanb_article_pub_033.pdf}}</ref>

Relative poverty measures are used as official poverty rates by the [[European Union]], UNICEF and the [[OECD]]. The main poverty line used in the OECD and the European Union is based on "economic distance", a level of income set at 60% of the median household income.<ref>{{cite news|url =http://news.bbc.co.uk/1/hi/magazine/8177864.stm|title = Just what is poor?|access-date = 25 September 2008|author=Michael Blastland|work=BBC News |date = 31 July 2009
}}</ref>

===Relative poverty compared with other standards===
A measure of ''relative poverty'' defines "poverty" as being below some relative poverty threshold. For example, the statement that "those individuals who are employed and whose household equivalised disposable income is below 60% of national median equivalised income are poor" uses a relative measure to define poverty.<ref name="In-Work Poverty New commonly agreed indicators at the EU level">{{cite journal |last1=Bardone |first1=Laura |last2=Guio |first2=Anne-Catherine |title=In-Work Poverty: New commonly agreed indicators at the EU level |journal=Statistics in Focus |date=2005 |url=https://ec.europa.eu/eurostat/web/products-statistics-in-focus/-/ks-nk-05-005 }}</ref>

The term ''relative poverty'' can also be used in a different sense to mean "moderate poverty"&nbsp;– for example, a [[standard of living]] or level of income that is high enough to satisfy basic needs (like [[water]], [[food]], [[clothing]], housing, and basic [[health care]]), but still significantly lower than that of the majority of the population under consideration.
An example of this could be a person living in poor conditions or squalid housing in a high crime area of a developed country and struggling to pay their bills every month due to low wages, debt or unemployment. While this person still benefits from the infrastructure of the developed country, they still endure a less than ideal lifestyle compared to their more affluent countrymen or even the more affluent individuals in less developed countries who have lower living costs.<ref>{{cite web|title=Inequality in Focus, October 2013: Analyzing the World Bank's Goal of Achieving "Shared Prosperity"|url=http://www.worldbank.org/en/topic/poverty/publication/inequality-in-focus-october-2013|website=World Bank|access-date=16 April 2015}}</ref>

=== Living Income Concept ===
Living Income refers to the income needed to afford a decent standard of living in the place one lives. The distinguishing feature between a living income and the poverty line is the concept of decency, wherein people thrive, not only survive. Based on years of stakeholder dialogue and expert consultations, the Living Income Community of Practice, an open learning community, established the formal definition of living income drawing on the work of Richard and Martha Anker, who co-authored "Living Wages Around the World: Manual for Measurement". They define a living income as:<ref name=":0">{{cite web|title=Living Income {{!}} Living Income Community of Practice|url=https://www.living-income.com/|access-date=19 November 2020|website=livingincome|language=en}}</ref><blockquote>The net annual income required for a household in a particular place to afford a decent standard of living for all members of that household. Elements of a decent standard of living include food, water, housing, education, healthcare, transport, clothing, and other essential needs including provision for unexpected events.</blockquote>Like the poverty line calculation, using a single global monetary calculation for Living Income is problematic when applied worldwide.<ref>Guidance manual on calculating and visualizing the income gap to a Living Income Benchmark Prepared for the Living Income Community of Practice The Committee on Sustainability Assessment (COSA) and KIT Royal Tropical Institute July 2020</ref> Additionally, the Living Income should be adjusted quarterly due to inflation and other significant changes such as currency adjustments.<ref name=":0" /> The actual income or proxy income can be used when measuring the gap between initial income and the living income benchmarks. The World Bank notes that poverty and standard of living can be measured by social perception as well, and found that in 2015, roughly one-third of the world's population was considered poor in relation to their particular society.<ref>{{cite web|title=Poverty and Shared Prosperity 2020|url=https://www.worldbank.org/en/publication/poverty-and-shared-prosperity|access-date=19 November 2020|website=World Bank|language=en}}</ref>

The Living Income Community of Practice (LICOP) was founded by The Sustainable Food Lab, GIZ and ISEAL Alliance to measure the gap between what people around the world earn versus what they need to have a decent standard of living, and find ways to bridge this gap.<ref name=":0" />

A variation on the LICOP's Living Income is the [[Massachusetts Institute of Technology]]'s Living Wage Calculator, which compares the local [[minimum wage]] to the amount of money needed to cover expenses beyond what is needed to merely survive across the United States.<ref>{{cite web|title=Living Wage Calculator|url=https://livingwage.mit.edu/|access-date=19 November 2020|website=livingwage.mit.edu}}</ref> The [[cost of living]] varies greatly if there are children or other dependents in the household.