The Poverty Line: The Measure Of What It Means To Be Poor

The Poverty Line: The Measure of What It Means to Be Poor

What it means to be poor is a difficult concept to define, as there is no consensus as to how we should properly measure it. Sociologists and government policymakers like to view poverty in absolute or relative terms, creating thresholds or cut-off lines to determine who is in poverty and who is not. To them, poverty is a measure of income and consumption.

Poverty is traditionally understood to mean a deprivation in the amount of money or material resources needed to meet a person’s basic needs such as housing, food, clothing, and transportation. It is typically based on whether a family’s income is sufficient to meet their basic needs based on a federally established threshold. According to the World Bank, absolute thresholds are the best way to evaluate poverty regarding welfare, because it guarantees that the poverty comparisons are consistent and people on welfare are treated equitably. In many cases, governments use an absolute measure of poverty

It was developed by, Mollie Orshansksy, a staff economist in the Social Security Administration. Her research showed that the typical family in the 60’s spent about one-third of their income on food, which she reasoned was a basic need for survival. Her threshold standard was therefore based on the cost of a minimum food diet multiplied times three. Although it has been updated annually to account for inflation using the Consumer Price Index and is also adjusted for family size, composition, and age of householder, it remains a fixed amount. This threshold is then compared to a family’s pretax cash income, excluding capital gains and noncash benefits to determine whether they are poor. Until recently it was the only measure that was used in the U.S. by policymakers, researchers, and advocates to create programs benefiting the poor and determine eligibility for