What Is the Poverty Threshold?

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.

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.