Chapter 15: Problem 14

How is the poverty rate calculated?

Short Answer

Expert verified

The poverty rate is calculated by first determining the poverty line, which is a threshold expressed as a percentage of the median income in a country or region. Then, using data sources such as census or household surveys, identify the number of people living below the poverty line and the total population. Finally, the poverty rate can be calculated using the formula: Poverty rate = \(\frac{\text{Number of people living below the poverty line}}{\text{Total population}}\) × 100

Step by step solution

Understanding the concept of poverty line

The poverty line is a threshold, usually expressed in terms of income, below which a person is considered to be living in poverty. The most common way to define the poverty line is to set it equal to a certain percentage of the median income in a country or region.

Identifying the number of people living below the poverty line

To calculate the poverty rate, we first need to determine the number of people living below the poverty line. This can be obtained from various data sources such as census data or household survey data. The data should provide information about individuals' or households' income levels.

Determining the total population

In order to find the overall poverty rate, we need to know the total population of the region or country being analyzed. This information can be obtained from census data or other demographic data sources.

Calculating the poverty rate

To calculate the poverty rate, you need to divide the number of people living below the poverty line by the total population. Then, multiply the result by 100 to express the poverty rate as a percentage. The formula for calculating the poverty rate is: Poverty rate = \(\frac{\text{Number of people living below the poverty line}}{\text{Total population}}\) × 100 Use this formula with the data obtained in steps 2 and 3 to calculate the poverty rate.

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