Absolute and relative poverty, although both ways of measuring poverty, differ in terms of their definition of what poverty actually is. Absolute poverty includes the lack of biological necessities, such as food, water, clothing, housing, and sanitation, whereas, relative poverty refers to a poverty line, and is a definition of the amount of income a person needs to satisfy basic needs. In basic terms, absolute poverty is a having a lack of basic resources, and relative poverty is more to do with income inequality.
Absolute poverty refers to a set condition, which is the same in every country, and does not change over a period of time. Relative poverty, on the other hand, refers to conditions which are subjective to the society in which the person lives, and therefore, does vary between countries, and can change over time e.g. more urban cities will have greater education, energy, and transportation costs, so the poverty line will be higher in this country, compared to poorer countries. People in relative poverty do have an income, but it is lower than the set income level. They are seen as poor because they do not have the capabilities to meet certain standard set by a community. For example, someone living in a rich society may have a steady income and all the necessities for living, but because they do not have as many luxuries as others living in the society, they are said to be in relative poverty. In contrast, if someone cannot afford necessities they are said to be in absolute poverty. Absolute poverty is more evident in third world countries, where people are living on $1 – $2 a day.