🏚️ Absolute and Relative Poverty
Two definitions: Absolute poverty.
Relative poverty.
- Absolute poverty is about survival — can be reduced through economic growth.
- Relative poverty is about social inclusion — it can exist even in wealthy countries.
- A country can reduce absolute poverty while relative poverty increases (if growth benefits the rich more).
Example: China has lifted hundreds of millions out of absolute poverty since 1980, but relative poverty (the gap between richest and poorest) has widened significantly.
📊 Single and Composite Indicators
Single indicators
- GDP per capita (PPP) — measures average income but ignores distribution, health, education.
- Life expectancy — reflects health outcomes but misses income and education.
- Literacy rate — measures education but is a narrow indicator.
Composite indicators
HDI: The Human Development Index (HDI).
MPI: The Multidimensional Poverty Index (MPI).
The IB loves comparing GDP per capita with HDI or MPI. A country can have high GDP per capita but low HDI (e.g. oil-rich states with poor education) — showing that income alone doesn't capture development.
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