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 politiciansâ€”who prefer to look at poverty in relative terms.
Relative poverty is slightly more involved, and the BBC weighs in withÂ 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. [â€¦]
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. [â€¦]
[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 [Â£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.