Economics · Economic development. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.
Absolute poverty means a person cannot afford the basic needs of life: food, clean water, clothing and shelter. Relative poverty means a person is poor compared with others in the same country, with an income well below the average, so they cannot take part in the normal life of their society.
Growth can cut absolute poverty while relative poverty rises, if the incomes of the poor grow more slowly than the average.
The main causes are unemployment, low wages, illness, age and environmental factors such as floods and drought. Governments respond with growth, better education and healthcare, more generous state benefits, progressive taxation and a national minimum wage.
Students say relative poverty means being unable to buy food. That is absolute poverty; relative poverty is about the gap between a person and the rest of society.
Answer: Absolute poverty falls, while relative poverty stays about the same.
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