Poverty Line

Published Jan 8, 2023

Definition of Poverty Line

The poverty line determines the estimated minimum level of income required to secure the necessities of life. It is usually calculated by taking the median or average income of a country and then adjusting it for the cost of living in that country. That means it describes the income level below which people are considered to be living in poverty.

Example

To illustrate this, let’s look at the poverty line in the United States. The US Census Bureau has published a number of poverty thresholds by size of family and number of children. According to these thresholds, the poverty line for a family of four in 2021 is an annual income of USD 27,479.  That means any family of four with an annual income below USD 27,479 in the United States is considered to be living in poverty.

Why Poverty Line Matters

The poverty line is an important tool because it helps to identify those who are living in poverty. This is important for policymakers, as it allows them to target their policies and programs to those who are most in need. It also helps to measure the effectiveness of poverty reduction policies and programs. Finally, it is also used to measure the level of inequality in a society, since it allows us to compare the incomes of different groups of people.