Poverty refers to the state of being poor. It is a relative concept, and its understanding varies with what level of living standards are considered essential in a community or a region. Absolute poverty, extreme poverty, or destitution refers to the complete lack of means necessary to meet basic personal needs such as food, clothing, and shelter.
Measures and Definitions of Poverty
Poverty Line is the income or expenditure level, below which a person is considered to be poor.
Head Count ratio
The Head Count Ratio (HCR) is the proportion of a population that lives below the poverty line. It is the most common way of measuring poverty.
Head Count Ratio can be measured with respect to a relative poverty line or an absolute poverty line. The main form of poverty line used in the OECD and the European Union countries is the relative one, based on the concept of economic distance, and is defined as a level of income usually set at 60% of the median household income.
Poverty Gap – Severity of Poverty
Poverty Gap Index is a measure of the intensity of poverty, and is expressed as a proportion of the poverty line. It measures the depth of poverty by considering how far, on average, the poor are from the poverty line. It is an improvement over the Head Count Ratio.Continue reading