Relative poverty

Relative poverty is a poverty measure based on a poor standard of living or a low income relative to the rest of society. Unlike absolute poverty, it does not necessarily imply that physical human necessities of nutrition, health and shelter cannot be met; instead it suggests that the lack of access to many of the goods and services expected by the rest of the contemporary society leads to social exclusion and damaging results for the individuals and families in relative poverty.

Measurements of relative poverty are similar to measurements of social inequality. However, there are often attempts to exclude the relative position of the richest from poverty measurements, so the OECD and European Union often use a poverty line based on 60% of the median equivalised net household income in individual countries: this has the effect of comparing the poorest in each society with those in the middle.

One of the consequences of using relative poverty to judge societies over time is that the poverty line tends to rise as incomes rise. This may be desirable if it reflects a changing social consensus about minimum acceptable standards of living. However, it may be less desirable if it leads to social and economic policies which give such an emphasis at reducing inequality that the cost includes keeping the incomes of the poorest at a lower level than they might have been had an absolute poverty measure been used to guide policy.