Poverty threshold

The poverty threshold, poverty limit or poverty line is the minimum level of income deemed adequate in a particular country. In practice, like the definition of poverty, the official or common understanding of the poverty line is significantly higher in developed countries (with HDI of under than 0.700 score) than in developing countries. In 2008, the World Bank came out with a figure (revised largely due to inflation) of $1.25 at 2005 purchasing-power parity (PPP). In October 2015, the World Bank updated the international poverty line to US$1.90 a day. Most scholars agree that it better reflects today's reality, particularly new price levels in developing countries. The common international poverty line has in the past been roughly $1 a day. At present the percentage of the global population living under extreme poverty is likely to fall below 10% according to the World Bank projections released in 2015.

Determining the poverty line is usually done by finding the total cost of all the essential resources that an average human adult consumes in one year. The largest of these expenses is typically the rent required to live in an apartment, so historically, economists have paid particular attention to the real estate market and housing prices as a strong poverty line affector. Individual factors are often used to account for various circumstances, such as whether one is a parent, elderly, a child, married, etc. The poverty threshold may be adjusted annually.

Charles Booth, a pioneering investigator of poverty in London at the turn of the 20th century, popularised the idea of a poverty line, a concept originally conceived by the London School Board. Booth set the line at 10 (50p) to 20 shillings (£1) per week, which he considered to be the minimum amount necessary for a family of 4 or 5 people to subsist on.Benjamin Seebohm Rowntree (1871–1954), a British sociological researcher, social reformer and industrialist, surveyed rich families in York, and drew a poverty line in terms of a minimum weekly sum of money "necessary to enable families ... to secure the necessaries of a healthy life", which included fuel and light, rent, food, clothing, and household and personal items. Based on data from leading nutritionists of the period, he calculated the cheapest price for the minimum calorific intake and nutritional balance necessary, before people got ill or lost weight. He considered this amount to set his poverty line and concluded that 27.84% of the total population of York lived below this poverty line. This result corresponded with that from Charles Booth's study of poverty in London and so challenged the view, commonly held at the time, that abject poverty was a problem particular to London and was not widespread in the rest of Britain. Rowntree distinguished between primary poverty, those lacking in income and secondary poverty, those who had enough income, but spent it elsewhere (1901:295–6).

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