Poverty

• 1. Introduction

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  Poverty kills around 18 million people every year, roughly 50,000 a day, from causes tied to deprivation. That number sits beneath a quieter statistic: in purchasing power terms, 85 percent of people live on less than 30 dollars a day, and two-thirds live on less than 10. Poverty is a state in which a person lacks the financial resources and essentials for a basic standard of living. It sounds simple. It is not. Experts cannot agree where the line falls, how to count the people below it, or even what counting should measure. Some say the bar sits too high, others too low, and one called the standard threshold an inaccurately measured and arbitrary cut off. How do you draw a line under human need? Why does wealth in a country so often skip its poorest citizens? And what, after centuries of effort, actually pulls a person across that line? The word itself carries old weight, descending from the Latin pauper, meaning poor.

• 2. Drawing The Line

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  Absolute poverty refers to a fixed standard, consistent over time and between countries, often called extreme or abject poverty. The dollar a day measure arrived in 1990, but it never meant a literal dollar at the exchange rate. It was set by purchasing power parity, asking how much local currency buys what a dollar buys in the United States. The World Bank moved the figure repeatedly. From 1993 through 2005 it stood at 1.08 dollars a day on that basis. In 2009 it rose to 1.25 dollars, and in 2015 it became less than 1.90 dollars a day, with moderate poverty drawn at less than 2 or 5 dollars. A 2007 report from the International Food Policy Research Institute defined ultra-poverty as living on less than 54 cents per day. Each nation also keeps its own threshold, and the gaps are vast. In 2010 the United States line sat at 15.15 dollars a day, while India used roughly 1 dollar and China 0.55 dollars, all on a purchasing power basis. Those mismatched lines make comparing national reports genuinely difficult. Relative poverty takes a different view entirely. It treats need as socially defined, shifting with the customs of a place. A person living in a small tent in an open field is poor if neighbors live in brick homes, but not if everyone around belongs to a nomadic tribe. The European Union leans on this idea, measuring poverty against the distribution of income in each member country. An EEC Council Decision in 1984 defined the poor as those whose material, cultural and social resources are so limited as to exclude them from a minimum acceptable way of life. In the OECD and the EU, that economic distance is commonly set at 60 percent of median household income.

• 3. The Disputed Count

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  Philip Alston, a UN special rapporteur on extreme poverty and human rights, called the 1.90 dollar line fundamentally flawed. He argued it allowed self congratulatory triumphalism about a fight he insists is completely off track. By his account, nearly half the global population, or 3.4 billion people, live on less than 5.50 dollars a day, a number that has barely moved since 1990. One estimate places the true scale even higher, with 4.3 billion people, 59 percent of the world, living on less than 5 dollars a day and unable to meet basic needs. Some scholars push for a minimum of 7.40 dollars, or even 10 to 15 dollars, calling those levels the floor for basic needs and a normal life expectancy. Beyond money entirely, ultra-poverty has been defined as receiving less than 80 percent of minimum caloric intake while spending more than 80 percent of income on food. The World Bank tells a more hopeful version of the same world. Between 1990 and 2015 it found the share living in extreme poverty fell from 37.1 percent to 9.6 percent, dropping below 10 percent for the first time. The number it forecast for 2015 was 702.1 million people, down from 1.75 billion in 1990. The People's Republic of China accounts for over three quarters of global poverty reduction from 1990 to 2005, a shift the Bank calls historically unprecedented. China alone made up nearly half of all extreme poverty in 1990.

• 4. When The Floor Gives Way

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  The collapse of the Soviet Union sent GDP per capita falling about 30 to 35 percent between 1990 and its low point in 1998. Poverty rates tripled, excess mortality rose, and life expectancy declined across the transition economies of Central and Eastern Europe and Central Asia. In Russia, president Boris Yeltsin's IMF-backed rapid privatization and austerity pushed unemployment into double digits and left half the population in destitution by the early to mid 1990s. By 1999, at the peak of that crisis, 191 million people were living on less than 5.50 dollars a day. As incomes recovered the rate dropped from 31.4 percent to 19.6 percent. Sub-Saharan Africa moved the other way. Extreme poverty there rose from 41 percent in 1981 to 46 percent in 2001, and a growing population pushed the number from 231 million to 318 million people. The World Bank later watched the global decline slow, noting the rate of decline had fallen by nearly half from its 25 year average, with parts of sub-Saharan Africa returning to early 2000 levels. Recent warnings turn sharper still. In July 2023 over 200 economists from 67 countries, among them Jayati Ghosh, Joseph Stiglitz and Thomas Piketty, wrote to the United Nations secretary general and the World Bank president that extreme poverty and extreme wealth had risen sharply and simultaneously for the first time in 25 years. In 2024, Oxfam reported that roughly five billion people had become poorer since 2020, and warned that current trends could postpone global poverty eradication for 229 years.

• 5. The Body And The Mind

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  Hunger and malnutrition are, in the World Health Organization's words, the single gravest threats to the world's public health, with malnutrition present in half of all child mortality cases. Almost 90 percent of maternal deaths during childbirth occur in Asia and sub-Saharan Africa, against less than 1 percent in the developed world. Disease compounds the trap. Malaria can cut GDP growth by up to 1.3 percent in some developing nations, and AIDS reduces African growth by 0.3 to 1.5 percent annually, diverting resources from productivity. Around 36.8 million people live with HIV/AIDS, with 954,492 deaths recorded in 2017. Poverty also reaches into cognition. One hypothesized mechanism is that financial worry consumes mental resources, leaving less for solving hard problems, which leads to poorer decisions that deepen the trap. Neuroscientists have documented poverty's imprint on brain structure and function across the lifespan, though some findings on cognitive impairment could not be replicated in follow-up studies. Childhood carries the heaviest cost. In a 1996 survey, 67 percent of children from disadvantaged inner cities said they had witnessed a serious assault, and 33 percent reported witnessing a homicide. Among fifth graders, 51 percent in New Orleans had been victims of violence, compared with 32 percent in Washington, DC. The Great Smoky Mountains Study, a ten-year project, watched about a quarter of families see a sudden rise in income. Among those children, behavioral and emotional disorders fell, while conscientiousness and agreeableness rose.

• 6. Schooling And Shelter

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  Students from low-income families are 2.4 times more likely to drop out than middle-income peers, and over 10 times more likely than high-income classmates. Researchers gave a name to the worst settings: the urban war zone, a poor, crime-laden district where deteriorated, violent conditions and underfunded schools breed inferior academic performance. The disadvantage often begins in primary school and follows a child upward. Gender bends the pattern by place. In poorer countries, low completion rates and pressure to marry early work against girls, while in richer countries with high completion rates the expectation to enter the labor force early works against boys. In Mauritania the adjusted gender parity index averages 0.86, but falls to 0.63 for the poorest 20 percent, even as the richest 20 percent reach parity. Countries with pastoralist economies that lean on boys' labor, such as Eswatini, Lesotho and Namibia, tilt the other way. Housing concentrates disadvantage in space. William J. Wilson's concentration and isolation hypothesis holds that as better-off African Americans move out, the poorest are left clustered together, cut off from job networks, role models and institutions that might offer escape. Gentrification renovates aging neighborhoods, then raises rents until poorer residents must leave to find affordable homes. Slum-dwellers make up a third of the world's urban population, and there are over 100 million street children worldwide. Most children in institutions have a surviving parent or close relative, and most entered because of poverty rather than orphanhood.

• 7. The Levers Of Escape

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  Three-quarters of the poor today are farmers, which makes raising farm incomes the core of the antipoverty effort. Growth in the agricultural productivity of small farmers is, on average, at least twice as effective at helping a country's poorest half as growth in nonagricultural sectors. Malawi proved the point. After the government reversed course and subsidized fertilizer and seed, farmers produced record-breaking corn harvests in 2006 and 2007, turning a country where nearly 5 million of 13 million people once needed emergency food aid into a major food exporter. Small interventions can carry outsized returns. Deworming children costs about 50 cents per child each year and is only a twenty-fifth as expensive as raising attendance by building schools. Iodised salt costs 2 to 3 cents per person a year, while even moderate iodine deficiency in pregnancy shaves off 10 to 15 IQ points. Income grants draw strong backing. In 1968, Paul Samuelson, John Kenneth Galbraith and 1,200 other economists asked the US Congress to introduce income guarantees, and Nobel laureates from Friedrich Hayek to Milton Friedman to James Tobin have supported a basic income. A 2008 study concluded that the money spent on in-kind transfers in India in one year could lift all of India's poor out of poverty for that year if handed over directly. Yet the wealthiest 20 percent of Egypt uses about 93 percent of the country's fuel subsidies, which is why grants are argued to reach the poor far better than subsidized supplies the non-poor enjoy too. Microloans, made famous by the Grameen Bank, lend small sums to borrowers without collateral or credit history. Even their founder, Muhammad Yunus, has criticized the model for making hyperprofits off the poor.

• 8. Planners And Searchers

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  Economist William Easterly draws a hard line between two kinds of helpers. He notes that 2.3 trillion dollars went to foreign aid across five decades, yet twelve-cent medicines never reached children to prevent malaria deaths, and three dollars never reached new mothers to help prevent millions of child deaths. He calls the failures the work of Planners, who apply global blueprints, take no responsibility, and believe outsiders already know the solutions. Searchers, by contrast, find out what works at the bottom and believe solutions must be homegrown. The cause of poverty stays ideologically charged, since each diagnosis points to a different cure. The socialist tradition locates the roots in distribution and the use of the means of production, calling for redistribution. The neoliberal school holds that creating conditions for profitable private investment is the answer. Governance threads through the debate, with research finding economic growth more effective at cutting poverty in well-governed countries. One empirical study found a positive correlation between dynastic politics and poverty, where a higher share of dynastic politicians in a province raised its poverty rate. History sets the backdrop. Geoffrey Parker recorded that by 1600, in Antwerp and Lyon, two of western Europe's largest cities, three-quarters of the population were too poor to pay taxes. Most economic historians believe extreme poverty was the norm for roughly 90 percent of people through most of human history, until industrialization in the 19th century began to break that grip. Max Roser estimates the number of people in poverty today is roughly the same as 200 years ago, back when the world held little more than a billion people and the vast majority of them were poor.