lowestincome

Lowest income refers to the portion of a society with the smallest earnings or household resources. In research and policy, this group is usually identified using distributional measures such as the bottom quintile (the lowest 20%), the bottom decile (the lowest 10%), or even the bottom 5%. The term can describe pre-tax market income or post-tax, disposable income, and is often adjusted for household size and composition to allow fair comparisons.

Measurement relies on data from national household surveys, income tax records, and administrative data. Researchers adjust for household size using equivalence scales and for price level differences with purchasing power parity when comparing across countries. Poverty lines—absolute or relative—are used alongside percentile cutoffs to classify “lowest income” groups. Absolute lines set a fixed consumption level, while relative lines compare to median or average income.

Why it matters: identifying the lowest income group supports policies aimed at reducing poverty and inequality, such as cash transfers, social assistance programs, minimum income guarantees, and wage subsidies. Internationally, programs are evaluated for reach and impact on living standards. Measuring changes over time helps assess the effectiveness of fiscal and social protection instruments.

Challenges include data gaps, informal economies, underreporting, and differences in price levels. Economic shocks, rising housing and energy costs, and demographic changes can alter who is classified as lowest income. Because of these factors, estimates of who is in the lowest income group are sensitive to definitions and data quality.