The media regularly tell us that "nine million people in France live below the poverty threshold", often shortened to "our country has nine million poor people" or "poverty is increasing in France because the proportion of people living below the poverty threshold has risen from 14.1% to 14.3%". Sadly, many of our fellow citizens have to survive on very modest sums. What is surprising, however, is the precision of these figures, which reflects a precise definition of the poverty threshold.
The first approach to setting such a threshold is to identify what people need to lead a decent life in a given place: enough food and clothing, and access to essential services. Disposable income is generally used, including social benefits and after taxes; the latter point is irrelevant to the populations concerned, but must be specified when making comparisons with the affluent. This definition is overly simplistic, since people on the same income live better where public services are more extensive. Furthermore, the requirements for a decent life are not the same everywhere, which distorts international comparisons. Nor does the same income provide the same purchasing power at different price levels. Nevertheless, poverty thresholds have been defined on both sides of the Atlantic, but in completely different ways.
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The limitations of absolute thresholds
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Soon after taking office following the assassination of John Kennedy, the new president of the United States, Lyndon Johnson, declared war on poverty at the very beginning of 1964. This gave rise to the idea of using a poverty threshold. The previous year, however, economist and statistician Mollie Orshansky (1915–2006) had already sought to define such a concept. Her observations showed that low-income families spent about one-third of their after-tax income on food. She calculated the average amount an American household spent on food according to its composition, then multiplied the result by three and took this figure as the poverty threshold. For a household consisting of a couple with two children, she obtained 3,100 at the time, roughly equivalent to €22,000 today.
