I’ve already men­tioned the World Bank’s star­tling def­i­n­i­tion of extreme poverty: $1.25, adjusted for PPP. This is what is known as absolute poverty and it is sel­dom used by politicians—who pre­fer to look at poverty in rel­a­tive terms.

Rel­a­tive poverty is slightly more involved, and the BBC weighs in with the inter­na­tion­ally accepted def­i­n­i­tion of rel­a­tive poverty: 60% of the median income for a given country.

This is not to com­ment on the expe­ri­ence of poverty or the rights and wrongs of who gets what, just to show how the sys­tem works. […]

It’s the cal­cu­la­tion the gov­ern­ment uses to mea­sure its suc­cess in reduc­ing poverty, includ­ing child poverty, for which it sets tar­gets. It’s also used for coun­try comparisons. […]

[The median is used] because cal­cu­lat­ing the mean would include every­one, includ­ing the Chelsea foot­ball team’s stel­lar earn­ers. Would it make sense to say that one person’s poverty depends on what John Terry earns [£150,000 /week]? Using the mean would make it a mea­sure of inequality.

But then some have argued that rel­a­tive poverty is so sim­i­lar to income inequal­ity that the lat­ter term should be used instead.