Can You Explain The Concept Of Poverty By Economists?

The word poverty means different things to different people. Clearly poverty is a condition in which people have inadequate incomes, but it is hard to draw an exact line between the poor and the no poor. Economists have therefore devised certain techniques, which provide the official definition of poverty.

Poverty was officially defined in the 1960s in the United States as an income not adequate to maintain a subsistence level of consumption. This was calculated from family budgets and double-checked by examining the fraction of incomes that was spent on food. Since that time, the budget has been updated by the government's consumer price index to reflect changes in the cost of living. According to the standard definition, the subsistence cost of living for a family of four was $15,569 in 1995. This figure represents the poverty line or demarcation between poor and no poor families. The poverty line also varies by family size.

While an exact figure for measuring poverty is helpful, scholars recognize that poverty is a relative term. The notion of a subsistence budget includes subjective questions of taste and social convention.

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