Question

How is the poverty rate calculated?

Short answer

A country's poverty rate is estimated as the percentage of its people living below the poverty line set by the government.

Step-by-step solution

Concept Introduction

Poverty refers to a situation in which a portion of a country's population lives below the 'Poverty Line,' which is the minimum level of income required to maintain the country's basic standard of living.

Explanation

The amount of money needed to meet basic necessities is determined at a given level. The poverty line is the income threshold at which a person is considered poor. The ratio of the people below this line to the total population is used to calculate a country's poverty rate.

Mathematically it is given as:

$\mathrm{Poverty}\mathrm{rate}=\frac{\mathrm{People}\mathrm{living}\mathrm{below}\mathrm{the}\mathrm{poverty}\mathrm{line}}{\mathrm{Total}\mathrm{population}}\times 100$