What is the Poverty Gap?

The term "poverty gap" can be used in a few different ways, and its meaning can vary depending on the type of poverty data used to determine poverty levels. Some social scientists use the term to describe the gap in income among diverse social groups, to define differences between the rich and poor, to describe poverty differences between men and women, or to show the gap in poverty for people of different races. In statistics, the poverty gap is the average amount of money those below the poverty line lack compared to those at or above the line. The definition of the poverty line can vary based on the country, but it is usually a ballpark measurement of the absolute least a person could make to cover necessities like shelter and adequate food.

The Federal Poverty Level (FPL), more popularly called the Federal Poverty Measure, is one of many means of measuring poverty levels and determining the poverty gap in the United States. The Federal Poverty Measure includes two slightly different measurements of poverty. One is called the poverty threshold, and the other is referred to as the set of poverty guidelines.

Poverty guidelines are set by the United States Department of Health and Human Services (HHS). Designed to oversee the health of the citizens of the United States, HHS handles Medicare and Medicaid and assists with medical services for those who cannot afford them. The HHS department uses its poverty guidelines to determine a citizen's eligibility for its services. As of 2010, the HHS poverty guideline was set at $18,310 US Dollars (USD) for three-person families living in the contiguous 48 states.

The poverty threshold is a poverty measurement set by the United States Census Bureau, a department created to survey the people of the United States to collect information about its populace. This department uses its poverty thresholds to calculate statistics about levels of poverty in the United States. As of 2008, the Census Bureau set its poverty threshold at $17,163 USD for a three-person family. As of 2004, the United States had an overall poverty gap of 12.7 percent. In this case, the poverty gap denotes the percentage of people who are not making enough to meet basic needs for adequate human survival.

Though an international poverty line is difficult to set accurately due to differences in currency and cultural perceptions of poverty, a 2005 figure set the international poverty line at $1.25 USD per day per person (PPP). This poverty line is meant to denote extreme poverty like that seen in the poorest of developing countries. Developing countries used to be known as third-world countries, but use of the term has fallen out of favor in the academic world due to its association with the Cold War, when the term was used to describe countries that were neither aligned with capitalist countries nor communism.