Poverty Gap

There’s the income gap, the wealth gap, and the lesser-known poverty gap. Know your gaps.

Take the average income of a population (a poor population, says the OECD) and subtract that from the poverty line, and you have the poverty gap. The poverty gap asks: how far are people below the poverty line, on average?

In order for a nation to have a poverty gap, the mean income of the people must be lower than the poverty line. Nope, no lowering the poverty line to close the gap. That line is an international standard...although, yeah, that makes it not that great of a measure, since different countries have different poverty thresholds. And yes, it is bizarre to think of having the same numbers applied to "poverty" in Silicon Valley, where you feel poor making less than 100 grand a year...compared with life in Chad, where 100 grand a year puts you in the wealthiest 0.0001% of the population.

The World Bank Development Research Group is the official poverty gap calculation master and maker. Other groups, like the OECD, use the poverty gap info. However, it’s more useful when it’s used to create the poverty gap index, a more accurate measure for measuring a nation’s poverty.

If there are mostly poor people in a nation, and a few super-wealthy, then the average income will be skewed toward the wealthy, and will make a nation’s poverty gap look...not that bad. "Average" here is the wrong metric; it should be median or something else. The poverty gap index, however, includes a head count for all earners below the poverty line...counting who is above water and who is below.

The water is fine...just fine.