Although poverty is generally considered to be undesirable due to the pain and suffering it may cause, in certain spiritual contexts "voluntary poverty," involving the renunciation of material goods, is seen by some as virtuous.
Poverty may affect individuals or groups, and is not confined to the developing nations. Poverty in developed countries is manifest in a set of social problems including homelessness and the persistence of "ghetto" housing clusters.
About 1/2 of the human population suffers from poverty. Poverty can be measured in terms of absolute or relative poverty. Absolute poverty refers to a set standard which is consistent over time and between countries. An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body (approximately 2000-2500 calories per day for an adult male).
The World Bank defines extreme poverty as living on less than US$ (PPP) 1 per day, and moderate poverty as less than $2 a day, estimating that "in 2001, 1.1 billion people had consumption levels below $1 a day and 2.7 billion lived on less than $2 a day." The proportion of the developing world's population living in extreme economic poverty fell from 28 percent in 1990 to 21 percent in 2001. Looking at the period 1981-2001, the percentage of the world's population living on less than $1 per day has halved.
However, most of this improvement has occurred in East and South Asia. In East Asia the World Bank reports that "The poverty headcount rate at the $2-a-day level is estimated to have fallen to about 27 percent, down from 29.5 percent in 2006 and 69 percent in 1990.
In Sub-Saharan Africa GDP/capita shrank by 14 percent and extreme poverty increased from 41 percent in 1981 to 46 percent in 2001, increasing the number of people living in poverty from 231 million to 318 million.
Other regions have seen little change. In the early 1990s the transition economies of Eastern Europe and Central Asia experienced a sharp drop in income. Poverty rates rose to 6 percent at the end of the decade before beginning to recede.
World Bank data shows that the percentage of the population living in households with consumption or income per person below the poverty line has decreased in each region of the world since 1990:
|East Asia and Pacific||15.40%||12.33%||9.07%|
|Europe and Central Asia||3.60%||1.28%||0.95%|
|Latin America and the Caribbean||9.62%||9.08%||8.64%|
|Middle East and North Africa||2.08%||1.69%||1.47%|
There are various criticisms of these measurements. Shaohua Chen and Martin Ravallion note that although "a clear trend decline in the percentage of people who are absolutely poor is evident, although with uneven progress across regions...the developing world outside China and India has seen little or no sustained progress in reducing the number of poor". However, since the world's population has increased, if instead looking at the percentage living on less than $1/day, and if excluding China and India, then this percentage has decreased from 31.35% to 20.70% between 1981 and 2004.
Other human development indicators are also improving. Life expectancy has greatly increased in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Even in Sub-Saharan Africa, where most Least Developed Countries are to be found, life expectancy increased from 30 years before World War II to a peak of about 50 years, before the HIV pandemic and other diseases started to force it down to the current level of 47 years. Child mortality has decreased in every developing region of the world. The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000. The percentage of children not in the labor force has also risen to over 90% in 2000 from 76% in 1960. There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water. The book The Improving State of the World finds that many other indicators have also improved.
Relative poverty views poverty as socially defined and dependent on social context. Income inequality is a relative measure of poverty. A relative measurement would be to compare the total wealth of the poorest one-third of the population with the total wealth of richest 1% of the population. There are several different income inequality metrics. One example is the Gini coefficient.
Income inequality for the world as a whole is diminishing. A 2002 study by Xavier Sala-i-Martin finds that this is driven mainly, but not fully, by the extraordinary growth rate of the incomes of the 1.2 billion Chinese citizens. However, unless Africa achieves economic growth, then China, India, the OECD and the rest of middle-income and rich countries will increase their relative advantage, and global inequality will rise.
The 2007 World Bank report "Global Economic Prospects" predicts that in 2030 the number living on less than the equivalent of $1 a day will fall by half, to about 550 million. An average resident of what we used to call the Third World will live about as well as do residents of the Czech or Slovak republics today. However, much of Africa will have difficulty keeping pace with the rest of the developing world and even if conditions there improve in absolute terms, the report warns, Africa in 2030 will be home to a larger proportion of the world's poorest people than it is today. However, economic growth has increased rapidly in Africa after the year 2000.
In many developed countries the official definition of poverty used for statistical purposes is based on relative income. As such many critics argue that poverty statistics measure inequality rather than material deprivation or hardship. For instance, according to the U.S. Census Bureau, 46% of those in "poverty" in the U.S. own their own home (with the average poor person's home having three bedrooms, with one and a half baths, and a garage). Furthermore, the measurements are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on "economic distance", a level of income set at 50% of the median household income. The US poverty line is more arbitrary. It was created in 1963-64 and was based on the dollar costs of the United States Department of Agriculture's "economy food plan" multiplied by a factor of three. The multiplier was based on research showing that food costs then accounted for about one third of the total money income. This one-time calculation has since been annually updated for inflation. Others, such as economist Ellen Frank, argue that the poverty measure is too low as families spend much less of their total budget on food than they did when the measure was established. Further, federal poverty statistics do not account for the widely varying regional differences in non-food costs such as housing, transport, and utilities.
The point is, economic aspects of poverty may focus on material needs, typically including the necessities of daily living, such as food, clothing, shelter, or safe drinking water. Poverty in this sense may be understood as a condition in which a person or community is lacking in the basic needs for a minimum standard of well-being and life, particularly as a result of a persistent lack of income.
Analysis of social aspects of poverty links conditions of scarcity to aspects of the distribution of resources and power in a society and recognizes that poverty may be a function of the diminished "capability" of people to live the kinds of lives they value. The social aspects of poverty may include lack of access to information, education, health care, or political power. Poverty may also be understood as an aspect of unequal social status and inequitable social relationships, experienced as social exclusion, dependency, and diminished capacity to participate, or to develop meaningful connections with other people in society.
The World Bank's "Voices of the Poor," based on research with over 20,000 poor people in 23 countries, identifies a range of factors which poor people identify as part of poverty. These include:
David Moore, in his book The World Bank, argues that some analyses of poverty reflect pejorative, sometimes racial, stereotypes of impoverished people as powerless victims and passive recipients of aid programs.
Currently modern, expansive welfare states that ensure economic opportunity, independence and security in a near universal manner are still the exclusive domain of the developed nations, commonly constituting at least 20% of GDP, with the largest Scandinavian welfare states constituting over 40% of GDP. These modern welfare states, which largely arose in the late 19th and early 20th centuries, seeing their greatest expansion in the mid 20th century, and have proven themselves highly effective in reducing relative as well as absolute poverty in all analyzed high-income OECD countries.
|Country||Absolute poverty rate|
(threshold set at 40% of U.S. median household income)
|Relative poverty rate|
Many different factors have been cited to explain why poverty occurs. However, no single explanation has gained universal acceptance.
Possible factors include:
Those living in poverty and lacking access to essential health services, suffering hunger or even starvation, experience mental and physical health problems which make it harder for them to improve their situation. One third of deaths - some 18 million people a year or 50,000 per day - are due to poverty-related causes: in total 270 million people, most of them women and children, have died as a result of poverty since 1990. Those living in poverty suffer lower life expectancy. Every year nearly 11 million children living in poverty die before their fifth birthday. Those living in poverty often suffer from hunger. 800 million people go to bed hungry every night. Poverty increases the risk of homelessness. There are over 100 million street children worldwide. Increased risk of drug abuse may also be associated with poverty.
Diseases of poverty reflect the dynamic relationship between poverty and poor health; while such infectious diseases result directly from poverty, they also perpetuate and deepen impoverishment by sapping personal and national health and financial resources. For example, malaria decreases GDP growth by up to 1.3% in some developing nations, and by killing tens of millions in sub-Saharan Africa, AIDS alone threatens “the economies, social structures, and political stability of entire societies”.
Those living in poverty in the developed world may suffer social isolation. Rates of suicide may increase in conditions of poverty. Death of a breadwinner may decrease a household's resilience to poverty conditions and cause a dramatic worsening in their situation. Low income levels and poor employment opportunities for adults in turn create the conditions where households can depend on the income of child members. An estimated 218 million children aged 5 to 17 are in child labor worldwide, excluding child domestic labor. Lacking viable employment opportunities those living in poverty may also engage in the informal economy, or in criminal activity, both of which may on a larger scale discourage investment in the economy, further perpetuating conditions of poverty.
Low income and wealth levels undermine the ability of governments to levy taxes for public service provision, adding to the 'vicious circle' connecting the causes and effects of poverty. Lack of essential infrastructure, poor education and health services, and poor sanitation contribute to the perpetuation of poverty. Poor access to affordable public education can lead to low levels of literacy, further entrenching poverty. Weak public service provision and high levels of poverty can increase states' vulnerability to natural disasters and make states more vulnerable to shocks in the international economy, such as those associated with rising fuel prices, or declining commodity prices.
Areas strongly affected by poverty tend to be more violent. In one survey, 67% of children from disadvantaged inner cities said they had witnessed a serious assault, and 33% reported witnessing a homicide. 51% of fifth graders from New Orleans (median income for a household: $27,133) have been found to be victims of violence, compared to 32% in Washington, DC (mean income for a household: $40,127).
The capacity of the state is further undermined by the problem that people living in poverty may be more vulnerable to extremist political persuasion, and may feel less loyalty to a state unable to deliver basic services. For these reasons conditions of poverty may increase the risk of political violence, terrorism, war and genocide, and may make those living in poverty vulnerable to human trafficking, internal displacement and exile as refugees. Countries suffering widespread poverty may experience loss of population, particularly in high-skilled professions, through emigration, which may further undermine their ability to improve their situation.
In politics, the fight against poverty is usually regarded as a social goal and many governments have institutions or departments dedicated to tackling poverty. One of the main debates in the field of poverty reduction is around the question of how actively the state should manage the economy and provide public services to tackle the problem of poverty. In the nineties, international development policies focused on a package of measures known and criticized as the "Washington Consensus" which involved reducing the scope of state activities, and reducing state intervention in the economy, reducing trade barriers and opening economies to foreign investment. Vigorous debate over these issues continues however, and most poverty reduction programs attempt to increase both the competitiveness of the economy and the viability of the state.
Developing countries face a range of obstacles to trading competitively on international markets. Almost half of the budget of the European Union for example is directed to agricultural subsidies, which primarily benefit large multinational agribusinesses who form a powerful lobby. Japan gave 47 billion dollars in 2005 in subsidies to its agricultural sector, nearly four times the amount it gave in total foreign aid. The US gives 3.9 billion dollars each year in subsidies to its cotton sector, including 25,000 growers, three times more in subsidies than the entire USAID budget for Africa, although America contributes a sum far larger than the 3.9 billion dollars through other agencies. Critics argue that agricultural subsidies in the developed world drain taxation revenue, increase the end-prices paid by consumers, and discourage efficiency improvements, while retaliatory trade barriers unfairly undermine the competitiveness of agricultural and other exports in those industries in which developing countries would otherwise have a significant comparative advantages.
Bringing the market to remote, rural areas can bring farmers the information to produce more profitably. For example, mobile phones could be used to do this, helping people in remote areas of the developing world. Farmers receive market information sent directly to their phones. In Ethiopia, remote farmers produce crops that may not bring the best profits. When they sell their products to a local trader, who then sells to another trader, and another, the cost of the food rises before it finally reaches the consumer in large cities. Economist Gabre-Madhin proposes warehouses where farmers could have constant updates of the latest market prices, making the farmer think nationally, not locally. Each warehouse would have an independent neutral party that would test and grade the farmer's harvest, allowing traders in Addis Ababa, and potentially outside Ethiopia, to place bids on food, even if it is unseen. Thus, if the farmer gets five cents in one place he would get three times the price by selling it in another part of the country where there may be a drought.
The Global Competitiveness Report, the Ease of Doing Business Index, and the Index of Economic Freedom are annual reports, often used in academic research, ranking the worlds nations on factors argued to increase economic growth and reduce poverty.
A now defunct theory for reducing poverty suggests that raising tariffs and import substitution leads to greater wealth by protecting the country from free trade. This theory was practiced highly between the 1950s and 1970s when it appeared to fail to develop wealth. The theory assumes a lack of trade barriers on incoming (often highly subsidized) goods from wealthier countries is also considered by some economists a driver of poverty. Most countries have some history of import substitution and direct government protection of and investment in local industries. The theory claims that reducing tariff receipts can lower a major source of government revenue & spending, while raising tariffs may improve the terms of trade for the poor. However, practice has shown that high tariffs lead to a stagnation of economic growth and development and the costs of the tariffs are borne most heavily on the poor.
Another approach to alleviating poverty is to implement Fair Trade which advocates the payment of a fair price as well as social and environmental standards in areas related to the production of goods.
Supporters argue that these problems may be solved with better auditing of how the aid is used. Aid from non-governmental organizations may be more effective than governmental aid; this may be because it is better at reaching the poor and better controlled at the grassroots level. As a point of comparison, the annual world military spending is over $1 trillion.
Some argue for a radical change of the economic system. There are several proposals for a fundamental restructuring of existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups: socialism, communism, anarchism, libertarianism, binary economics and participatory economics, among others.
The IMF and member countries have produced Poverty Reduction Strategy papers or PRSPs.
In his book The End of Poverty (ISBN 1594200459), a prominent economist named Jeffrey Sachs laid out a plan to eradicate global poverty by the year 2025. Following his recommendations, international organizations are working to help eradicate poverty worldwide with intervention in the areas of housing, food, education, basic health, agricultural inputs, safe drinking water, transportation and communications.
Among some individuals, such as ascetics, poverty is considered a necessary or desirable condition, which must be embraced in order to reach certain spiritual, moral, or intellectual states. Poverty is often understood to be an essential element of renunciation in religions such as Buddhism and Jainism, whilst in Roman Catholicism it is one of the evangelical counsels. Certain religious orders also take a vow of poverty. For example, the Franciscan orders have traditionally forgone all individual and corporate forms of ownership. However, while individual ownership of goods and wealth is forbidden for Benedictines, following the Rule of St. Benedict, the monastery itself may possess both goods and money, and throughout history some monasteries have become very rich indeed.
In this context of religious vows, poverty may be understood as a means of self-denial in order to place oneself at the service of others; Pope Honorius III wrote in 1217 that the Dominicans "lived a life of voluntary poverty, exposing themselves to innumerable dangers and sufferings, for the salvation of others". However, following Jesus' warning that riches can be like thorns that choke up the good seed of the word (Matthew 13:22), voluntary poverty is often understood by Christians as of benefit to the individual - a form of self-discipline by which one distances oneself from distractions from God.