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What Is the Poverty Threshold?

Impoverished children eating watermelon.
A shanty town.
As the poverty threshold is unique to each family's needs, the threshold for a single mother is higher because she requires a higher income to support herself and her child.
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  • Written By: Daniel Liden
  • Edited By: Jenn Walker
  • Last Modified Date: 24 July 2014
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The poverty threshold, also referred to as the poverty line, describes the amount of income that an individual or family must have in order to maintain a certain minimum standard of living. The calculation of the poverty threshold income is generally based on necessities such as housing and food costs. Given the variable costs of such items in different places around the world, the threshold is set at significantly different levels in different countries. It also varies based on family conditions; it is, for instance, lower for an individual living alone than for a single mother because a single mother requires a higher income to support herself and her child.

There are many reasons for a quantified poverty threshold to exist. Most simply, it allows for a statistical analysis of the well-being of a population and can provide a valuable economic measurement of a nation's economy. More practically, poverty threshold measurements are often used to determine eligibility in various government aid programs, especially for children. Under some governments, for example, individuals at or around the poverty line may be eligible for government job aid or subsidized legal assistance. Children in families living at or around the poverty threshold may be eligible to participate in government-sponsored school programs as well, or may receive special government health insurance policies.

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The existence of a discrete poverty threshold, particularly as it relates to receiving aid in various forms, is sometimes criticized. Many argue that one who makes slightly more than the poverty-level of income is not actually in a significantly better state than one below it. Labeling one but not the other as impoverished makes little sense when they both likely have a highly similar quality of life.

While the poverty threshold does vary based on changing prices and conceptions of need in different places, a definition of "absolute poverty" independent of such concerns does exist. An individual in a state of absolute poverty lacks the resources to get the minimum levels of food, clothing, shelter, health care, and other resources necessary to maintain health. An absolute poverty threshold would, essentially, need to be examined purely on the basis of an individual's ability to consume these necessities in any given socioeconomic condition. By this definition, poverty in a developing country should be no different from poverty in a more developed country. In either situation, the individual lacks the resources to get the bare minimum of resources to sustain himself.

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candyquilt
Post 3

For us economists and statisticians, the poverty threshold is an excellent tool that helps us figure out how different nations are doing economically and what their living standards are.

I work for an organization that researches poverty threshold among other things. We look at how different countries determine the threshold, the percentage of the population that is below the threshold and how this changes from year to year.

If a country is doing well, meaning developing it's economy, making money and reflecting these changes to the public by providing more jobs, higher incomes and more government services, people will slowly move from under the threshold to middle-class status. This helps us determine how their quality of life is improving (or not improving) as they develop. It also says a lot about a government's policies.

ddljohn
Post 2

I read somewhere that the US poverty threshold was set in the 1960s and has not been updated since. It's hard to believe because I think a lot has changed since then. I wonder how the numbers would differ if the government reformed the threshold.

The other thing I was surprised to learn is that the only status that's below the poverty threshold is basically hunger/starvation. I think it's sad that even in developed countries today there are people living below the poverty line. I think more than categorizing people and seeing if they deserve certain benefits or not, it should be our goal to raise all people who are below the threshold above it.

burcidi
Post 1

I completely agree that people just above the poverty threshold are not in a better situation than people who are under. It is unfair that those slightly above the threshold are not eligible for aid programs.

I experienced this myself as a graduate student. Despite having three different jobs, it was so hard to pay for everything when I was a graduate student because the cost of everything was so high where I lived. I applied to a government aid program hoping to qualify for free health insurance, tax cuts, or food stamps.

They did not approve my application because I made $100 above the annual income threshold to be labeled "poor." I was so upset because I really needed the assistance and I knew that the extra $100 did not make my life any better. I don't think that's fair.

Maybe there should be a minimum and maximum threshold for poverty that is more encompassing. That might be a more fair way to help people in need.

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