Defining PovertyThe definition of poverty varies over time; whereas up until recently, the global poverty line was set at 1.90 U.S. dollars a day in terms of Purchasing Power Parities, it was set to 2.15 U.S. dollars in September 2022 due to the rising inflation. Moreover, the national poverty levels vary greatly. For instance, a person residing in the United States needs a far higher level of income to afford a certain standard of living than a person in Nigeria. In middle-income countries, the poverty line is set at 3.65 U.S. dollars a day as of 2022 to reflect the higher amount of income required there, and at 6.85 U.S. dollars in high-income countries.
Furthermore, measuring the share of people living below the poverty line has some limitations as it does not take the sheer depth of the poverty into account. Hence, if the 71 percent of the population in Somalia currently living on less than 2.15 U.S. dollars a day become even poorer, the share will remain the same. Here, the poverty gap comes into account. The poverty gap measures how far below the poverty line the average poor person in a country is, thus taking the depth of poverty into account.