Relative poverty means having significantly fewer economic resources than the typical person in a particular society. Absolute poverty means lacking the income or resources required to meet basic needs, regardless of how wealthy other people are.
Relative poverty is measured against a society's current income distribution. A common threshold, used by the European Union and the United Kingdom, is income below of the national median after adjustments for household size.
For example, if median monthly income is \text{\}900$, the relative poverty threshold is:
Anyone below \text{\}540$ would be classified as relatively poor under this measure. In the United Kingdom, 4.5 million children, or 31%, lived in relative low-income households after housing costs in 2023/24. This illustrates how relative poverty exposes inequality and limited participation within a wealthy state.
Absolute poverty uses a defined minimum standard. In June 2025, the World Bank updated its international extreme-poverty line to \text{\}3.00$ per person per day at 2021 purchasing power parity. This allows comparison of severe deprivation across states while accounting for price differences.
| Feature | Relative poverty | Absolute poverty |
|---|---|---|
| Basis | Income compared with the national median | Fixed minimum needed for basic needs |
| Main political issue | Inequality and social exclusion | Survival and severe material deprivation |
| Effect of rising median income | Poverty threshold rises | Threshold remains broadly stable in real terms |
| Limitation | Comparisons between countries are difficult | A global threshold may overlook local needs |
A common misconception is that absolute poverty is completely unchanging. Its real standard is intended to remain consistent, but institutions periodically update the monetary threshold when purchasing-power data changes.
For the IB Global Politics HL extension topic area of poverty, connect both measures to power, interdependence, and Development and Sustainability. In an exam response, define each term, apply a specific contemporary case, and evaluate what each measure reveals or overlooks.