Absolute poverty, also knows as
extreme or abject poverty, measures the number of people living under a certain
income threshold which is now $1.25 a day. Relative poverty on the other hand is comparing individuals
income with the average income. There
are currently over 1 billion people in the world living in extreme poverty. The poverty threshold was originally
developed in 1963 by Mollie Orshansky by taking the cost of the US Department
of Agriculture’s economy food plan for families of three or more and
multiplying that number by three.
It was determined to multiply the cost by three since the Agriculture
Department’s 1955 Household Food Consumption Survey found that families spend
an average of one third of their total income on food. Poverty thresholds are now updated by the
Census Bureau by using the Consumer Price Index which measures changes in the
price level of a market basket of consumer goods and services purchased by
households. The thresholds are
mainly used for statistical purposes.
Poverty Guidelines are another form
of the federal poverty measure.
The guidelines simplify the poverty threshold so that programs such as
Head Start, the Food Stamp Program, and the Children’s Health Insurance Program
can use the poverty guideline to determine financial eligibility for these
resources. These programs aim to
give benefits such as education and healthcare to families who cannot afford
them.
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