Poverty

Poverty is when someone does not have enough money or resources to meet their basic needs, like food, clothing, and shelter. It can happen for many reasons, including differences in laws, social conditions, economics, and politics. There are two main ways to measure poverty: absolute poverty, which looks at whether someone can afford basic needs, and relative poverty, which compares someone’s living standards to others in the same place and time.

As of 2019, most of the world’s people lived in poverty. Many earned less than $30 a day, with two-thirds living on less than $10 daily, and some only on $1.90. More than 40% of these poor people lived in countries affected by conflict. Even in countries that are growing economically, the poorest often do not share fairly in the new wealth.

Social factors like gender, disability, and race can make poverty worse, especially for women, children, and minorities. People in poverty are also more likely to suffer from environmental problems, climate change, natural disasters, and extreme weather. Because of this, international goals like the United Nations’ Sustainable Development Goal 1: "No Poverty" aim to connect fighting poverty with many other important societal goals.

Definitions and etymology

The word poverty comes from an old French word meaning "poor." It describes a situation where a person or community does not have enough money or resources to meet basic needs like food, clothing, and shelter.

Different groups define poverty in different ways. The United Nations says poverty means not having enough to meet basic needs, like food, clothing, or a place to learn and heal. It also means lacking opportunities, feeling unsafe, and being excluded from society.

The World Bank explains that poverty means lacking the well-being and resources needed to live a dignified life. This includes not having enough money, health, education, clean water, safety, or the chance to improve one's situation.

The European Union measures poverty differently, looking at how income compares to others in the same country. They consider someone poor if their resources are too limited to meet the minimum standard of living expected in their community. This information is collected by Eurostat, which uses special surveys to gather statistics from each member country.

Measuring poverty

Main article: Measuring poverty

See also: Poverty threshold and Individual Deprivation Measure

Poverty means not having enough money or resources to meet basic needs like food, clothing, and shelter. There are two main ways to measure poverty. Absolute poverty looks at whether someone can meet basic needs compared to a set standard. Relative poverty looks at whether someone’s living standards are lower compared to others in the same place and time.

Absolute poverty is about severe lack of basic needs such as food, clean water, shelter, and healthcare. One common measure is the “dollar a day” standard, which has changed over time. In 1990, it was $1.08 a day, then $1.25 a day in 2009, and later $1.90 a day in 2015. Different countries have different poverty lines; for example, the United States used $15.15 per day in 2010, while India used $1.00 per day.

Relative poverty is about how a person’s income compares to others in the same area. For example, if most people live in comfortable homes, someone living in a tent might be considered in relative poverty even if others also live in tents. In many wealthy countries, relative poverty is measured as earning less than 60% of the average income.

Poverty can also be understood in terms of social exclusion, where people feel left out or unable to connect with others. This can happen due to lack of relationships, isolation, or being treated unfairly. Efforts to reduce poverty include helping people connect with their communities and providing support.

Secondary poverty happens when someone earns enough but spends it on things like alcohol, leaving them unable to meet basic needs. This was common in past times when some groups chose not to spend on unnecessary items to save money.

Characteristics

The effects of poverty can also be causes of poverty, creating a cycle that operates across individual, local, national, and global levels.

Health

One-third of deaths worldwide are due to poverty-related causes. People in developing nations, especially women and children, are more affected. Those in poverty often suffer from hunger, disease, and lower life expectancy. Infectious diseases like malaria and tuberculosis can continue poverty by taking away resources from investment and productivity. Poverty can also affect cognitive function, as financial worries can burden mental resources, leading to difficulty in solving complicated problems. This can result in suboptimal decisions that further perpetuate poverty. Poor nutrition, environmental toxins, and stress also impact cognitive development.

Hunger

It is estimated that over one billion people go to bed hungry each night. Poor people spend a larger portion of their budgets on food, making them more vulnerable to food price increases. Threats to food supply, such as drought and water crises, can also cause hunger. Intensive farming can exhaust soil fertility and reduce agricultural yields. Goal 2 of the Sustainable Development Goals aims to eliminate hunger and undernutrition by 2030.

Mental health

Studies show that people with financial stability and those in low socioeconomic status tend to perform worse cognitively due to external pressures. Stressors such as low income, inadequate healthcare, discrimination, and exposure to criminal activities contribute to mental disorders. Children exposed to poverty-stricken environments often have slower cognitive development. The World Health Organization highlights that social determinants like income inequality, lack of access to quality education, unemployment, insecure housing, and exposure to violence are linked to poor mental health outcomes.

Education

Research shows that children from low-income families are at high risk of not achieving well in school. This often starts in primary school. Instruction in many educational systems is geared toward students from more advantaged backgrounds, putting children in poverty at a disadvantage. They are more likely to repeat grades, face difficult school placements, and not complete high school. Poverty affects children's success in school as their home environment may not align with the school's expectations. Poor children often miss school due to illnesses like hunger, fatigue, and infections, which affect their focus and concentration.

Shelter

The right to housing is considered a human right. Higher density and lower-cost housing provide more opportunities for low-income families. The concentration of poverty in certain areas can entrench poverty, as the poorest are isolated from job networks and support systems. Gentrification, where neighborhoods become more affluent, often forces poor residents to leave due to rising rents. Poverty also increases the risk of homelessness. Slum-dwellers make up a third of the world's urban population and face living conditions no better than rural poverty. There are over 100 million street children worldwide, many of whom are in institutions due to poverty rather than being orphans.

Utilities

The poor often pay more for utilities. Access to water, sanitation, energy, and telecommunication services helps reduce poverty. Lack of access to sanitation services affects 2.5 billion people, with many still practicing open defecation. Subsidies for water consumption often benefit the richer, urban population, leaving the poor to buy water from vendors at higher prices. Subsidies for laying new connections to water networks show more promise for the poor.

Financial services

Low-income individuals and families often have limited or predatory access to credit, making it difficult to invest in their futures.

Prejudice and exploitation

Cultural factors like discrimination can negatively affect productivity. Children are more than twice as likely to live in poverty as adults, and women are also highly affected. Women often face additional burdens as caregivers, which can worsen their poverty. Poverty can lead to increased chances of disability, creating a cycle where disability and poverty reinforce each other. Experts suggest that economic opportunities, rather than values, explain most movement in and out of poverty. Societal perceptions often divide the poor into "good" and "bad" categories, which can be inaccurate. Poverty can drive some individuals, including children, into risky situations to survive. As poverty decreases, instances of such exploitation also tend to decrease.

Poverty reduction

See also: Aid and Development aid

Different ways to help reduce poverty include making basic needs like food and shelter more available or helping people earn more money to buy these needs. Building roads is one strategy that can do both. It helps people get to places where they can find basic needs and also makes it easier for them to sell things and earn more money.

Reducing poverty also means making sure everyone has a fair chance. Some groups, like Oxfam, suggest that very wealthy people have too much money, which makes it harder for others to get ahead. They believe that if the very wealthy paid more taxes or if rules were changed to make wealth more evenly shared, it would help reduce poverty. Things like taxes on very high incomes or on large amounts of personal wealth can help make life better for everyone, especially those who are struggling the most.

Increasing the supply of basic needs

Improving technology

New technologies, like better seeds, fertilizers, and new ways to water crops, have helped grow more food and reduce hunger. Before factories and machines became common, poverty was a normal part of life because there wasn’t enough wealth to go around. But with new inventions, even things that used to be expensive, like cars and computers, have become affordable for many people.

Better health knowledge also helps. For example, in Sri Lanka, doctors learned ways to keep mothers healthier during pregnancy, which saved many lives. Simple and cheap solutions, like clean water filters and washing hands, can prevent sickness and save lives. Adding helpful nutrients to everyday items, like adding iodine to salt, can also improve health and intelligence.

State funding

See also: Political corruption, Tax havens, Transfer mispricing, Developing countries' debt, and Conditionality

Sometimes, the government needs to help provide basic needs. Having one system to pay for healthcare can save money and make it easier for everyone to get help when they need it. It’s also better to give money directly to poor families rather than trying to sell them cheaper fuel, because not all poor families will benefit from cheaper fuel prices.

Unfortunately, sometimes leaders steal money that should go to help poor people. This money can end up in banks far away, and not reach the people who need it. Some countries owe a lot of money to banks and other countries, which takes money away from important services like schools and hospitals. Helping these countries pay off their debts can let them spend more on their people.

Some organizations that lend money to poor countries add extra rules that make it hard for those countries to spend money on what they need most. This can mean cutting back on important things like help for farmers. But when countries give farmers help, like free seeds or fertilizer, it can lead to better harvests and more food for everyone.

There are also some companies that buy up debt from poor countries for very low prices and then try to make them pay back much more than they owe. This can take away even more money that poor countries need.

Improving access to available basic needs

Main articles: Reverse brain drain and Human capital flight

Even when there are products available, poor people still need to be able to get to them. Better roads and transportation can make a big difference. In Africa, it can cost more to move fertilizer just a short distance than it does to ship it all the way from another country, because the roads are not good. Programs that bring basic needs to remote areas, like small shops or delivery services, can also help.

When doctors and nurses from poor countries move to richer countries for work, it leaves fewer skilled health workers in their home countries. Some ideas to solve this include making doctors and nurses work in their home country for a while before they can move, or offering better chances for health workers to stay and work in their own countries. Using technology, like video calls, to give healthcare from far away can also help communities that don’t have many doctors nearby.

Preventing overpopulation

Main articles: Demographic transition and family planning

Poverty and not having access to birth control can lead to more children being born than a community can support, which makes poverty even harder to solve. When both men and women get more education and have more control over their lives, they often choose to have fewer children. This helps families and communities grow in a healthier way. The United Nations says that education helps people earn money and build stronger lives.

Increasing personal income

The following are strategies used or proposed to increase personal incomes among the poor. Raising farm incomes is described as the core of the antipoverty effort as three-quarters of the poor today are farmers. Estimates show that growth in the agricultural productivity of small farmers is, on average, at least twice as effective in benefiting the poorest half of a country's population as growth generated in nonagricultural sectors.

Income grants

Main articles: Guaranteed minimum income, Social security, and Welfare spending

A guaranteed minimum income makes sure that everyone has enough money to meet their basic needs. One way to do this is through a basic income, where every person gets a regular amount of money to live on, no matter how much they earn otherwise. Studies in places like Ethiopia, Kenya, and Malawi show that giving people money directly can help them spend more, go to school more, and eat better.

Helping people who already have jobs by giving them extra money has not worked well for the poorest people. Some people think that a basic income is a better idea than other ways to help, like setting a minimum wage or giving money only to people who are unemployed. Many famous economists have supported the idea of a basic income.

Giving money directly to poor people is better than trying to sell them cheaper things, because not all poor people will benefit from cheaper prices. For example, in Egypt, the richest people use most of the country’s fuel discounts. In some places, the money spent on giving things away could be enough to lift everyone out of poverty if it went straight to the people who need it most. Helping hungry people by giving them money to buy food from local farmers is also a good idea, because it helps both the hungry people and the farmers.

The biggest problem with giving money directly is that it can be hard for poor countries to afford. But some places have found ways to do it, like using special scanning technology to send money quickly. New kinds of money systems could also make it easier and cheaper to send money to poor people.

Economic freedoms

See also: Economic freedom and Red tape

Corruption can make it very hard and expensive for people to start businesses. In some places, it can take many steps, a lot of money, and many days to start a simple business, while in other places it can be done quickly and cheaply. When starting a business is too hard, it helps only big companies and not the small ones where most new jobs are created. Sometimes, people have to pay extra money to government workers just to get things done, which is like an extra tax.

When people have the right to own land and keep what they earn, it helps reduce poverty. If people know they can keep the land they work on, they are more likely to improve it and make it more productive. Better roads and the chance to move to places with more opportunities also help people earn more money.

Financial services

See also: Unbanked, Microfinance, and Microcredit

Small loans to people who don’t have a lot of money or good credit can help them start small businesses. But sometimes these loans can also cause problems, like making people owe too much money.

People in poverty often want a safe place to keep their money more than they want loans. Many poor people don’t have bank accounts because it’s not worth it for banks. New ways to save money, like using mobile phones, can help. People can deposit money through shopkeepers and get it back when they need it, making it easier to send money to family far away.

Education and vocational training

Free education from early childhood through college helps children from poor families get better jobs and earn more money. Training programs that teach specific job skills can also help reduce poverty.

Simple and cheap things, like giving children medicine to keep them healthy or giving girls free sanitary products, can help them stay in school. Giving money for school meals can also help more children go to school and pay attention better.

Programs that give money to families when they do certain things, like sending their children to school or getting vaccines, can help encourage good behavior. In Mexico, such a program helped more children go to school and grow healthier.

Obstacles

Economist William Easterly pointed out a problem with the usual way of helping people who are poor. He called the people who plan these helps "Planners." He said that even though $2.3 trillion was spent on help for other countries over five decades, important things still didn’t get done. For example, children couldn’t get cheap medicines to avoid getting very sick, and new mothers didn’t get the money they needed to keep many babies safe. He believed that even though the help was meant to do good, it didn’t work well because the "Planners" were making the decisions, not people who were looking for better ways to help.

Antipoverty institutions

See also: Sustainable Development Goals

In 2015, all countries that are part of the United Nations agreed on 17 important goals for the future. These are called the Sustainable Development Goals. They were meant to replace older goals set in 2000, called the Millennium Development Goals. Many of these goals need to be finished by 2030. Goal 1 is to help end extreme poverty. This means making sure no one has to live on less than $1.25 a day. It also means creating support systems for everyone and making sure people have fair access to money and resources. Plans to fight poverty need to be made at local, regional, and world levels.

Main article: Development bank

A development bank is a special type of financial group that helps support projects to improve economies. These banks are often owned by governments and give money to projects that normal banks might not support. The World Bank is the biggest development bank in the world.

See also: Nongovernmental organization

Over the past few decades, the number of groups that help people without being part of the government has grown a lot. These groups, called nongovernmental organizations, sometimes face challenges because there are too many of them, each doing small projects in different ways. Some aid money from richer countries must be spent only on products or experts from that country, which can make helping others more expensive and less effective. Local groups often know the areas they work in better and can help more efficiently, but they don't always get as much money. Programs like the US Agency for International Development are trying to work more with local partners to make aid better.

Causes

Main article: Causes of poverty

See also: Attributions for poverty

Poverty can happen for many reasons, and people sometimes disagree about what causes it. Some believe that unfair sharing of resources and wealth is the main problem, while others think that creating chances for businesses to grow will help reduce poverty.

Poverty often continues across generations because of habits and outside factors that make it hard for families to escape. When there's a big gap between rich and poor, it can lead to problems like political unrest. Some experts say that better government and fair rules can help reduce poverty, especially when combined with economic growth.

Historically, most people lived in very poor conditions until the 19th century when industrialization began to change that. Some argue that poverty grew worse with colonialism and capitalism, while others believe these systems eventually helped improve living standards, even if inequality remains a challenge today.

Ethics

Human rights

Some people believe that not having enough money and resources is a violation of human rights. The Universal Declaration of Human Rights says that everyone has the right to social security.

Environmentalism

The poor often suffer the most from damage to the environment caused by the rich using natural resources without caring for the results. For example, most of the gases that heat up the planet come from wealthy countries, but it is the poorer countries that face the biggest problems from climate change. This unfair situation has led to movements for environmental justice and climate justice.

Some reports suggest that climate change could make it harder to reduce poverty, and by 2030, many more people might struggle to meet their basic needs because of it. Possible effects of a temperature rise include food shortages, water problems, loss of fish in some areas, and stronger storms affecting coastal areas.

Spirituality

For some people, choosing to live with less is important for spiritual or religious reasons. In religions like Buddhism, Hinduism, and Jainism, living simply is seen as a way to grow spiritually. In Christianity, some communities choose to live with little to follow their beliefs more closely. This choice can also come from a wish to support others who are struggling.

Leaders in the Christian faith have talked about the value of choosing a simple life, while also stressing the need to help those who are poor because of unfair situations.