Poverty

Each country measures poverty according to its level of development, societal norms, and values. Because of these differences, the poverty level may change from country to country; thus, there is no uniformity in the poverty line. The poverty line is a measure of the amount of money a government or a society believes is necessary for a person to live at a minimum level of subsistence or standard of living (Barker 1997).

In the United States, the poverty line measurement was developed in the mid-1960s by Mollie Orshansky (1965). Essentially, a poverty level (line) was determined by figuring out how much a family needed to maintain a minimally adequate diet and then multiplying by three (represents the number in a family). The United States government adopted this standard, and, with minor yearly adjustments, has used it ever since (Ellwood 1988).

The establishment of a poverty line has political implications. Poverty lines are established at given points of time, and they are usually adjusted, minimally, on a yearly basis. The question of who to count and what to count remains important because a poverty line reveals what a country does and does not do in addressing the needs of its poor citizens.

When estimating global poverty, the United States poverty line is not used. Although there are disagreements on its use, the World Bank uses poverty lines that are set at $1 and $2 per day (U.S. dollars) in 1993 Purchasing Power Parity (PPP) terms. The PPPs measure the relative purchasing power of currencies across countries. It was estimated that in 1998, 1.2 billion people worldwide had consumption levels below $1 a day—24 percent of the population of the developing world—and 2.8 billion people lived on less than $2 a day. For purposes of analysis, the World Bank uses the poverty lines that are based on the norms for respective countries (World Bank 2001).