Explain what information is contained in the poverty rate statistic and what determines the poverty line?...

Explain what information is contained in the poverty rate statistic and what determines the poverty line? Are there problems in using an absolute scale to measure poverty? If so, explain them.

Expert Solution

The poverty rate statistic depicts the percentage of people living below the poverty line in a country where poverty line is the minimum income a person should earn to be considered as not poor in a country. The poverty line is determined by the government where a committee of economists and statisticians is formed to determine the minimum income needed for survival of a household.

Yes, there might be problem with using an absolute scale to measure poverty. This is because a household might have sufficient income to cover their daily needs but the income level is low as compared to other households in the country but absolute poverty will consider the household living above the poverty line. However, compared to other households in the country the household is poor. Thus, relatively the household is poor but not absolutely.

Thus, there are problems in using an absolute scale to measure poverty.

Rahul Sunny answered 2 years ago

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