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The top eleven causes of poverty around the world

Aug 23, 2024

Approximately 700 million people around the world live below the international poverty line. But why? Updated for 2024, we look at 11 of the top causes of poverty around the world.

For most of us, living on less than $2.15 a day seems far removed from reality. But it is the reality for roughly 700 million people around the globe (according to the latest World Bank data). That’s roughly 8.5% of the world’s population currently living in poverty. 

We’ve made significant progress towards ending poverty in the last few decades — in 1990, the number of people living in poverty was 1.8 billion. However, in recent years we’ve also undone a lot of that progress. Climate change, conflict, and the continued impact of COVID-19 have led to an increase of nearly 100 million people experiencing poverty compared to 2019 figures. Let’s take a closer look at these, and eight other top causes of poverty. 

1. Inequality

At Concern, our core understanding of poverty is that it’s a combination of inequality and risk. Inequality is easy enough to understand as a concept: It’s what happens when one group has fewer rights and resources based on an aspect of their identity (such as gender, caste, ethnicity, social status, age, ability).

How inequality functions as a cause of poverty, however, is a bit more multifaceted. When people are given fewer rights or assets based on their ethnicity or tribal affiliation, that means they have fewer opportunities to move ahead in life. We see this often in gender inequalities that leave women with fewer economic and civic rights. In this case, it doesn't matter that someone has more rights than someone else. What matters is that there is someone else who doesn't have enough.

These inequalities become amplified when they’re combined with risk. For example: A widow raising a family of five may not have the same resources that would have been available to her husband based on her gender. If she also happens to be a refugee living in a camp, or in an area that’s especially vulnerable to climate change (or both), that puts even more pressure on the few resources she has. This is what fuels the cycle of poverty . 

Let’s take a closer look at some of these risks…

Learn more about the causes of poverty — and how we're solving them

2. conflict.

Conflict is at the top of the list of risks that can send a person or family into poverty. Large-scale, protracted crises can grind an otherwise functioning economy to a halt. Prior to the conflict (and resulting humanitarian crisis) that began in 2011, as few as 10% of Syrians lived below the poverty line. Today, that number has been inverted, with UNHCR estimating over 90% of Syrians living below the poverty line at the end of 2023. 

Conflict has become more localized over the last few decades, which has a huge impact on communities with fewer headlines in the international press. However, as we have also seen over the past two years with the escalated crisis in Ukraine , a major conflict in one part of the world can also have a ripple effect on economies in entirely different countries — and continents.

Poverty and conflict: How to break the cycle

Conflict is the single biggest driver of humanitarian needs today. Here, Dr. Caitriona Dowd looks at the links between poverty and conflict — and why we need to break the cycle.

3. Hunger and malnutrition

It’s a vicious cycle: poverty causes hunger , but hunger is also a key cause of poverty . If a person doesn’t get enough food, they’ll lack the strength and energy needed to work. Or their immune system will weaken from malnutrition and leave them more susceptible to illness that prevents them from getting to work. They may also go into further debt if they need to see a doctor or get ongoing care. 

This can lead to a vicious cycle, especially for children. From womb to world, the first 1,000 days of a child’s life are critical for a lifetime of health. However, malnourished mothers are more likely to have malnourished children, and the costs of malnutrition can be felt over a lifetime. Adults who were stunted as children earn, on average, 22% less than those who weren't stunted. In Ethiopia, stunting contributes to GDP losses as high as 16%.

Extreme Poverty and Hunger: A Vicious Cycle

There’s no way around it: If we want to end poverty, we have to end hunger. Here's how the two are connected.

4. Poor healthcare systems — especially for mothers and children

As we saw above with the effects of hunger, extreme poverty and poor health go hand-in-hand. In countries with weakened health systems, easily-preventable and treatable illnesses like malaria, diarrhea, and respiratory infections can be fatal. Especially for young children.

When people must travel far distances to clinics or pay for medicine, it drains already vulnerable households of money and assets. This can tip a family from poverty into extreme poverty. For women in particular, pregnancy and childbirth can be a death sentence.  Maternal health is often one of the most overlooked areas of healthcare in countries that are still built around patriarchal structures. New mothers and mothers-to-be are often barred from seeking care without their father's or husband's permission. Adolescent girls who are pregnant (especially out of wedlock) face even greater inequities and discrimination.

5. Public health crises and epidemics

Living in a country without basic healthcare access is one thing, but what happens if a major epidemic or pandemic breaks out? The World Bank estimates that, during the first year of the West African Ebola epidemic , Liberia and Sierra Leone saw GDP losses of 3.4% and 3.3%, respectively. These losses (combined with a 2.1% loss in Guinea) totaled nearly $1.6 billion. A study from Johns Hopkins University estimates that cholera (another ongoing epidemic in many countries) costs Bangladesh $122 million per year. 

In a community that’s experiencing an active outbreak, businesses, infrastructure, and governments can grind to a halt in order to manage current cases and prevent future spread. Shelter-in-place measures often prevent low-income people from getting to work as many jobs don’t have remote options. If a patient dies, especially if they were a parent or caregiver, other members of a family (including children) may need to step in to find work and make up for the lost income, which can mean a lifetime of working low-paying jobs.

As we saw with COVID-19, a public health crisis can also have an effect on countries that aren’t at the epicenter of contagion. Many countries in Africa experienced relatively low numbers of covid cases, however border closures and interruptions to trade and other key services mean that many families are still, four years later, recovering from the economic loss. 

6. Little or no access to clean water, sanitation, and hygiene (WASH)

More than 2 billion people don’t have access to clean water at home. This presents another health issue that’s linked to poverty: Poor sanitation and hygiene means higher rates of disease transmission and even fatalities. 

Beyond that, the global water crisis exacerbates many existing inequalities, broadening the poverty gap. When water points are far away, it’s usually the task of women and girls to collect it. UNICEF estimates that women and girls spend 200 million hours collecting water every day — time that could be better spent in school or working on other projects that can generate income for a family. 

Investing in water can also be a key solution to poverty: The UN notes that every $1 invested in WASH initiatives brings a $4 return in costs (and then some). 

7. Climate change

There’s no doubt in 2024 that climate change causes poverty and disproportionately affects low-income families and communities. And the problem is getting worse: In 2015, the World Bank estimated that the climate crisis would push more than 100 million people into poverty by 2030. In 2024, that estimate has gone up to more than 130 million people. 

Many low-income countries are both on the frontlines of the climate crisis and rely heavily on agriculture and pastoralism for their economies. Malawi , as an example, is 80% agrarian. Farming families often have only just enough food and assets to last through the next season, and not enough reserves to fall back on in the event of a poor harvest. So when climate change or natural disasters (including the widespread droughts caused by El Niño ) leave millions of people without food, it pushes them further into poverty, and can make recovery even more difficult.

How climate change keeps people in poverty

By 2030, climate change could force over 130 million into extreme poverty. Here's how five effects of climate change keep communities trapped in poverty.

8. Lack of education

Not every person without an education is living in extreme poverty. But most adults living in extreme poverty did not receive a quality education . And, if they have children, they're likely passing that on to them. 

But education is also called the great equalizer for a reason. It can open the door to jobs and other resources and skills that a family needs to not just survive, but thrive. UNESCO estimates that 171 million people could be lifted out of extreme poverty if they left school with basic reading skills. Poverty threatens education, but education can also help end poverty .

9. Poor public works and infrastructure

What if you have to go to work, but there are no roads to get you there? Or what if heavy rains have flooded your route and made it impossible to travel? We’re used to similar roadblocks (so to speak) in the United States. But usually we can rely on our local governments to step in.

A lack of infrastructure — from roads, bridges, and wells, to cables for light, cell phones, and internet — can isolate communities living in rural areas. Living off the grid often means living without the ability to go to school, work, or the market to buy and sell goods. Traveling further distances to access basic services not only takes time, it costs money, keeping families in poverty.

10. Lack of social support systems

In the United States, we’re familiar with social welfare programs that people can access if they need healthcare or food assistance. Many of us pay directly into unemployment insurance and our future retirement funds through our paychecks. These systems ensure that we have a safety net to fall back on if we lose our job or retire.

But not every government can provide this type of help to its citizens. Without that safety net, there’s nothing to stop vulnerable families from backsliding further into extreme poverty. This is especially true for countries facing conflict or other long-term crises that have also left people more vulnerable to natural and man-made disasters and less likely to receive the support they need when they need it. 

11. Lack of personal safety nets

If a family or community has reserves in place, they can weather some risk. They can fall back on savings accounts or even a low-interest loan in the case of a health scare or an unexpected layoff. Proper food storage systems can help stretch a previous harvest if a drought or natural disaster ruins the next one.

But people living in extreme poverty can’t rely on these safety nets. At its core, poverty is a lack of basic assets or a lack of return from what assets a person has. This leads to negative coping mechanisms, including pulling children out of school so that they can help support the family, and selling off assets to buy food. That can help them make it through one bad season, but not another. For communities constantly facing climate extremes or prolonged conflict, the repeated shocks can send a family reeling into extreme poverty and prevent them from ever recovering, let alone setting aside some funds for the next emergency.

Concern’s work to end poverty

At Concern, we work to sustainably end poverty by addressing inequality and risk, tailoring solutions that support the specific forms of inequality and vulnerabilities faced within each community. 

Equality, particularly gender equality, is a pivotal part of all of our programs, and we work with community members and leaders to question and challenge the underlying assumptions that perpetuate equality gaps while designing solutions that accommodate people of all genders, levels of ability, ages, races, social status, and more. We aim for equality of outcomes, not equality of inputs. 

From there, we look at the specific risks and conditions that cause poverty in a specific country, region, or community. Often our solutions to poverty work with families to build livelihoods that include more than one source of income. We mentor program participants and train them on business management, marketing, bookkeeping, and other essential skills. We also provide cash grants and help to establish local Village Savings and Loans Associations (and other similar committees) to help create community safety nets. 

What we have found through more than 55 years of work is that the communities and individuals we work with already know what they want to do, they just need a few resources to make it happen. We provide those resources, along with some sustainable means of keeping them up long after we’re needed.

Support Concern's work

Causes of poverty, solved

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Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?

What does global poverty look like if we rely on the notions of poverty in countries like denmark, the us, or germany and how should this perspective inform our aspirations for the future of global poverty.

Abstract: The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.

The global poverty line that the UN relies on is based on the national poverty lines in the world’s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world’s rich countries – like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.

Note: Since the publication of this article, the World Bank has updated its poverty data. See the note at the end for more information.

In every country of the world there are people living in poverty. Even in the world’s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.

Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average 9 years earlier than those among the richest 20%. 1 In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold. 2

Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of ending ‘extreme poverty’ to be the number 1 goal of the global Sustainable Development Goals . According to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the International Poverty Line . According to the latest global statistics almost one in ten people live in extreme poverty globally.

If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?

It is the reality of our extremely unequal world – in which every tenth person lives in extreme poverty – that makes such an extremely low poverty line necessary. Without having an extremely low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN’s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.

In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.

Slightly higher global poverty lines – such as the poverty line of $3.10 per day that Kate Raworth relies on in her ‘Doughnut’ framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen’s absolute poverty line based on minimal nutritional requirements – all have the same value. 3  These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines.

Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the very poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of the very poorest people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.

Why not both?

Yet, only measuring global poverty relative to such extremely low poverty lines has its own large downside.

By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world’s population. This matters. The majority of the world do not live in extreme poverty anymore , but billions are nevertheless living in great poverty still.

The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an additional poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett – you find it in his short, yet widely-cited essay ‘The case for a high global poverty line’ from eight years ago. 4

Defining global poverty lines

The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries. 5 This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which where a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.

One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain here in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world’s poorest countries. 6 Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.

In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now directly available via the World Bank statistics. 7

What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries — countries like Denmark, the US, or Germany. 8 That is what Pritchett suggested eight years ago: “Since the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.”

The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal. 9 And I would also recommend Tony Atkinson’s last book ‘ Measuring Poverty around the World ’ for an excellent recent overview of the topic.

→ To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.

The basics of global poverty measurement

Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible.

First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.

Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power. 10 To this end incomes and expenditures are expressed in so-called international dollars . This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ in the US . This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. 11

Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I’m referring to international-$ and not US-$. 12

An additional higher poverty line of $30 per day

Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett’s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.

By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:

• European countries: The span of poverty lines in high-income countries in Europe ranges from int.-$25 to int.-$38 per day .
• The US: A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of int.-$23 and int.-$35 per day respectively.
• Survey result: A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of int.-$37.58 per day
• UBI: The daily income paid as ‘Universal Basic Income’ in a pilot study in Germany corresponds to an income of int.-$48.19 per day .
• Social care: The average basic social care payout in Germany (‘Hartz-IV’) corresponds to int.-$30.78 per day

The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day.

Just as someone who lives on less than $1.90 per day is defined as extremely poor, a person who lives on less than $30 a day could be considered moderately poor.

A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I’d fall back on that income level again.

In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.

Who is considered poor in rich countries? Poverty lines and other relevant benchmarks

Poverty lines in european countries.

As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.

Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person’s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner’s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible.

One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) – ‘per capita’ income – or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person – known as ‘equivalised’ income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN’s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called PovcalNet , and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.

In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations. 13

As high-income European countries I’m referring to those European countries, which according to the Eurostat statistics had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.

These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):

• Sweden: $29.40 per da
• Norway: $37.80 per day
• Austria: $31 per day
• UK: $25.04 per day
• Switzerland: $35.82 per day
• Germany: $28.35 per day
• France: $27.28 per day
• Luxembourg: $43.86 per day
• Finland: $27.22 per day
• Iceland: $31.64 per day
• Ireland: $24.68 per day
• Netherlands: $28.6 per day
• Belgium: $26.92 per day
• Denmark: $29.06 per day

The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.

The poverty line in the US

Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.

The US poverty line is very often criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics.

How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article. 14

Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.

One alternative is to use the World Bank's poverty and inequality data – which expresses incomes in per capita terms – to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate. 15

The official poverty rate in the US in 2019 was  10.5% ,  as reported  by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$). 16

An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day 17 Very close to the one-person poverty line based on Orshansky’s work.

A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.

Survey results – Below which income do you consider a person poor?

The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too.

An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?

For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015. 18

The mean answer given by the German population for a cutoff below which a person is considered poor was 947€ per month. In international dollars per day this corresponds to an income of int.-$37.58 . 19

Universal Basic Income

Universal Basic Income (UBI) is a political idea that is becoming rapidly more popular.

A large UBI study in Germany – called ‘Mein Grundeinkommen’ – sets this income at €1200. In international-$ this corresponds to an income of int.-$48.19 per day . 20

Social security in Germany

Germany pays basic social care for its citizens. This social security payment is referred to as ‘Hartz-IV’.

How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person received on average 783 Euro per month. That corresponds to int.-$30.78 per day . 21

The Roslings’ suggest a cutoff of $32 per day

Anna Rosling-Rönnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book ‘ Factfulness ’. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very poor conditions .Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.

The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at int.-$32 per day .

Kahneman's and Deaton's study of income and emotional well-being

Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income. 22

The authors find that higher incomes go together with higher self-reported life satisfaction, but for people’s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people’s emotional well-being – a finding that is often cited to argue that additional economic growth does not improve people’s lives in high-income countries. 23

Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are int.-$205 per day .

It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company gets paid that salary.

For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.

How many people in the world live in poverty?

We have seen that 10% of the world live in extreme poverty as defined by the UN. How large is the share of the world that lives in moderate poverty?

The latest global data tells us that 85% of the world population live on less than $30 per day . These are 6.5 billion people.

Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.

All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.

The chart shows where in the world people are poor. If we would only rely on the UN’s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no ‘developed countries’ — there is work to do for all.

But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.

Countries in which the majority do not live in poverty have only left poverty behind in recent history

Two centuries ago the global income distribution was very different. Back then almost everyone in the world was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past.

Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.

The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained here ) which makes clear that Denmark is among the least unequal countries in the world.

The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.

You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty – like Ethiopia – you see just how large the differences in average incomes are.

GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far. 24 It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys. 25

Billions of people live in countries where average incomes are very low

The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country’s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country’s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).

After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.

What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the average income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day.

And where incomes are low, living standards generally are poor . As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.

As I have said before , people are not poor because of who they are, but because of where they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in – this single factor matters more for a person’s income than all other factors taken together . The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.

→ See my previous article: The economies that are home to the poorest billions of people need to grow if we want global poverty to decline .

The future of global poverty

The world today is far from the ‘end of poverty’ relative to any poverty definition. After two centuries of unprecedented progress against the very worst poverty it is still the case that every tenth person lives on less than $1.90 per day .

As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance.

Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors did not know that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today’s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.

What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is possible to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.

Continue reading Our World in Data : My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work here .

Note: The World Bank has updated its poverty and inequality data

The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.

The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).

This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.

Read more about the World Bank's updated methodology:

• From $1.90 to $2.15 a day: the updated International Poverty Line
• Explore the latest World Bank data on poverty and inequality

Acknowledgements: I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.

Brønnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. https://jech.bmj.com/content/75/2/145

For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.

Kate Raworth (2017) – A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: https://doi.org/10.1016/S2542-5196(17)30028-1 You find the metrics that the Doughnut relies on in the Appendix here .

Jason Hickel – Could you live on $1.90 a day? That's the international poverty line and here .

Allen, Robert C.(201). – Absolute Poverty: When Necessity Displaces Desire . American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080

Lant Pritchett (2013) – Monitoring progress on poverty: the case for a high global poverty line. Online here https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf

Jolliffe and Prydz (2016)

Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank’s low-income category.

The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185–198 (2016). https://doi.org/10.1007/s10888-016-9327-5 The researchers also report an average high-income country poverty line of $21.70 per day.

High income countries in the World Bank framework are however relatively poor compared to the countries that I’m focusing on here – the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. Here you find the World Bank income classification cutoffs .

The range of incomes considered ‘middle’ and ‘high’ income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.

Martin Ravallion (2019) – On Measuring Global Poverty . NBER Working Paper 26211. DOI 10.3386/w26211

This is possible by relying on the work of the International Comparison Project , which monitors the prices of goods and services around the world.

Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.

Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” American Economic Journal: Macroeconomics 2 (4): 1–35. A working paper version is available online here .

Keep in mind that in the special case of the US the US-$ equals the international-$.

The European reference incomes are national median equivalised disposable income after social transfers.

The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions.

Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.

This is according to Eurostat here , where you also find the relevant data. (If the link should break, search on Google for ‘Distribution of income by quantiles - EU-SILC and ECHP surveys’.)

There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.

Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I’m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here – which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.

This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.

The following are the relevant calculations. All of them are based on PovcalNet data:

Germany’s median monthly income in 2017 was $1417.29 according to PovcalNet.

60% of the median expressed in daily income/consumption is 0.6*$1417.29=$850.374/30=$28.35 per day

Sweden’s median monthly income in 2017 was $1469 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1469)/30=$29.38 per day

Norway’s median monthly income in 2017 was $1890 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1890)/30=$37.8 per day

Austria’s median monthly income in 2017 was $1534 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1534)/30=$30.68 per day

In the UK the median monthly income in 2017 was $1252 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1252)/30=$25.04 per day

France’s median monthly income in 2017 was $1364 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1364)/30=$27.28 per day

Switzerland’s median monthly income in 2017 was $1791 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1791)/30=$35.82 per day

Spain’s median monthly income in 2017 was $982 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*982)/30=$19.64 per day

Iceland’s median monthly income in 2017 was $1582 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1582)/30=$31.64 per day

Luxembourg’s median monthly income in 2017 was $2193 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*2193)/30=$43.86 per day

Netherland’s median monthly income in 2017 was $1430 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1430)/30=$28.6 per day

Belgium’s median monthly income in 2017 was $1346 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1346)/30=$26.92 per day

Denmark’s median monthly income in 2017 was $1453 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1453)/30=$29.06 per day

Ireland’s median monthly income in 2017 was $1234 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1234)/30=$24.68 per day

Finland’s median monthly income in 2017 was $1361 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1361)/30=$27.22 per day

According to the " Annual Update of the HHS Poverty Guidelines " the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the World Bank , the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 =  15% .

Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40

This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines.

Jolliffe, Dean, and Espen Beer Prydz. 2016. Estimating International Poverty Lines from Comparable National Thresholds . Washington, DC.

Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the  World Bank here .

You can see our detailed calculations in this Google Colabs document .

The US median monthly income in 2017 was $1640 according to PovcalNet.

60% of the median expressed in daily income/consumption is (0.6*1640)/30=$32.8 per day

These reports are called ‘Armuts- und Reichtumsbericht der Bundesregierung’ online at armuts-und-reichtumsbericht.de

The latest survey was produced by aproxima and published in 2016. It is published as Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repräsentativen Bevölkerungsbefragung „ARB-Survey 2015“ , Berlin: Bundesministerium für Arbeit und Soziales (Hrsg.).

The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank here .

This means the perceived poverty threshold corresponds to €947/0.84=int.-$1,127.38 per month or int.-$37.58.

The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank here .

This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.

That’s €783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.- $30.78 per day.

Kahneman and Deaton (2010) – High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489

Kahneman and Deaton analyze two different concepts self-reported satisfaction:

– Emotional well-being refers to the “emotional quality of an individual's everyday experience – the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.”

– Life evaluation refers to the thoughts that people have about their life when they think about it.

The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore – emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.

The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.

There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.

GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption – the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.

Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of ‘nonprofit institutions serving households’ (NPISH) is included as part of household consumption within national accounts, but not within household surveys.

On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).

Deaton, Angus. 2005. “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World).” The Review of Economics and Statistics 87 (1): 1–1.

Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. “Lights, Camera… Income! Illuminating the Nation"

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The World Bank Group is committed to fighting poverty in all its dimensions. We use the latest data, evidence and analysis to help countries develop policies to improve people's lives, with a focus on the poorest and most vulnerable.

Around 700 million people live on less than $2.15 per day, the extreme poverty line. Extreme poverty remains concentrated in parts of Sub-Saharan Africa, fragile and conflict-affected areas, and rural areas.

After decades of progress, the pace of global poverty reduction began to slow by 2015, in tandem with subdued economic growth. The Sustainable Development Goal of ending extreme poverty by 2030 remains out of reach.

Global poverty reduction was dealt a severe blow by the COVID-19 pandemic and a series of major shocks during 2020-22, causing three years of lost progress. Low-income countries were most impacted and have yet to recover. In 2022, a total of 712 million people globally were living in extreme poverty, an increase of 23 million people compared to 2019. 

We cannot reduce poverty and inequality without also addressing intertwined global challenges, including slow economic growth, fragility and conflict, and climate change.

Climate change is hindering poverty reduction and is a major threat going forward. The lives and livelihoods of poor people are the most vulnerable to climate-related risks.

Millions of households are pushed into, or trapped in, poverty by natural disasters every year. Higher temperatures are already reducing productivity in Africa and Latin America, and will further depress economic growth, especially in the world’s poorest regions.

Eradicating poverty requires tackling its many dimensions. Countries cannot adequately address poverty without also improving people’s well-being in a comprehensive way, including through more equitable access to health, education, and basic infrastructure and services, including digital.

Policymakers must intensify efforts to grow their economies in a way that creates high quality jobs and employment, while protecting the most vulnerable.

Jobs and employment are the surest way to reduce poverty and inequality. Impact is further multiplied in communities and across generations by empowering women and girls, and young people.

Last Updated: Apr 02, 2024

Closing the gaps between policy aspiration and attainment

Too often, there is a wide gap between policies as articulated and their attainment in practice—between what citizens rightfully expect, and what they experience daily. Policy aspirations can be laudable, but there is likely to be considerable variation in the extent to which they can be realized, and in which groups benefit from them. For example, at the local level, those who have the least influence in a community might not be able to access basic services. It is critical to forge implementation strategies that can rapidly and flexibly respond to close the gaps.

Enhancing learning, improving data

From information gathered in household surveys to pixels captured by satellite images, data can inform policies and spur economic activity, serving as a powerful weapon in the fight against poverty. More data is available today than ever before, yet its value is largely untapped. Data is also a double-edged sword, requiring a social contract that builds trust by protecting people against misuse and harm, and works toward equal access and representation.

Investing in preparedness and prevention

The COVID-19 pandemic demonstrated that years of progress in reducing poverty can quickly disappear when a crisis strikes. Prevention measures often have low political payoff, with little credit given for disasters averted. Over time, populations with no lived experience of calamity can become complacent, presuming that such risks have been eliminated or can readily be addressed if they happen. COVID-19, together with climate change and enduring conflicts, reminds us of the importance of investing in preparedness and prevention measures comprehensively and proactively.

Expanding cooperation and coordination

Contributing to and maintaining public goods require extensive cooperation and coordination. This is crucial for promoting widespread learning and improving the data-driven foundations of policymaking. It is also important for forming a sense of shared solidarity during crises and ensuring that the difficult policy choices by officials are both trusted and trustworthy.

Overall, with more than 60 percent of the world’s extreme poor living in middle-income countries, we cannot focus solely on low-income countries if we want to end extreme poverty. We need to focus on the poorest people, regardless of where they live, and work with countries at all income levels to invest in their well-being and their future.

The goal to end extreme poverty works hand in hand with the World Bank Group’s goal to promote shared prosperity. Boosting shared prosperity broadly translates into improving the welfare of the least well-off in each country and includes a strong emphasis on tackling persistent inequalities that keep people in poverty from generation to generation.

Our work at the World Bank Group is based on strong country-led programs to improve living conditions—to drive growth, raise median incomes, create jobs, fully incorporate women and young people into economies, address environmental and climate challenges, and support stronger, more stable economies for everyone.

We continue to work closely with countries to help them find the best ways to improve the lives of their least advantaged citizens.

Last Updated: Oct 17, 2023

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11 top causes of global poverty.

Around 8% of the world’s population lives in extreme poverty — but do you know why? We look at 11 of the top causes of global poverty.

Living on less than $2 a day feels like an impossible scenario, but’s a reality for around 600 million people in our world today. Approximately 8% of the global population lives in extreme poverty, commonly defined as surviving on only $1.90 a day, or less

There is some good news: In 1990, that figure was 1.8 billion people, so serious progress has been made. While many wonder if we can really end extreme poverty , we at Concern believe the end is not only possible — but possible within our lifetimes. There’s no “magic bullet” solution to poverty , but understanding its causes is a good first step. Here are 11 of those causes, fully revised for 2020.

1. INEQUALITY AND MARGINALIZATION

“Inequality” is an easy, but sometimes misleading term used to describe the systemic barriers leaving groups of people without a voice or representation within their communities. For a population to escape poverty, all groups must be involved in the decision-making process — especially when it comes to having a say in the things that determine your place in society. Some of these may be obvious, but in other situations, it can be subtle.

Gender inequality, caste systems, marginalization based on race or tribal affiliations are all economic and social inequalities that mean the same thing: Little to no access to the resources needed to live a full, productive life. When combined with different combinations of vulnerability and hazards which comprise the rest of this list — a marginalized community may become even more vulnerable to the cycle of poverty .

2. CONFLICT

Conflict is one of the most common forms of risk driving poverty today. Large-scale, protracted violence that we’ve seen in areas like Syria can grind society to a halt, destroying infrastructure and causing people to flee (often with nothing but the clothes on their backs). In its tenth year of conflict, Syria’s middle class has been all but destroyed, and over 80% of the population now lives below the poverty line.

But even small bouts of violence can have huge impacts on communities that are already struggling. For example, if farmers are worried about their crops being stolen, they won’t invest in planting. Women also bear the brunt of conflict , which adds a layer of inequality to all conflict: During periods of violence, female-headed households become very common. And because women often have difficulty getting well-paying work and are typically excluded from community decision-making, their families are particularly vulnerable.

3. HUNGER, MALNUTRITION, AND STUNTING

You might think that poverty causes hunger (and you would be right!), but hunger is also a cause — and maintainer — of poverty. If a person doesn’t get enough food, they’ll lack the strength and energy needed to work (or their immune system will weaken from malnutrition and leave them more susceptible to illness that prevents them from getting to work).

The first 1,000 days of a child’s life (from womb to world) are key to ensuring their future health and likelihood of staying out of poverty. If a mother is malnourished during pregnancy, that can be passed on to her children, leading to wasting (low weight for height) or stunting (low height for age). Child stunting , both physical and cognitive, can lead to a lifetime of impacts: Adults who were stunted as children earn, on average, 22% less than those who weren’t stunted. In Ethiopia, stunting contributes to GDP losses as high as 16%.

ADULTS WHO WERE STUNTED AS CHILDREN EARN, ON AVERAGE, 22% LESS THAN THOSE WHO WEREN’T STUNTED. IN ETHIOPIA, STUNTING CONTRIBUTES TO GDP LOSSES AS HIGH AS 16%.

4. POOR HEALTHCARE SYSTEMS — ESPECIALLY FOR MOTHERS AND CHILDREN

Extreme poverty and poor health often go hand in hand. In countries where health systems are weak, easily preventable and treatable illnesses like malaria, diarrhea, and respiratory infections can be fatal — especially for young children. And when people must travel far distances to clinics or pay for medicine, it drains already vulnerable households of money and assets, and can tip a family from poverty into extreme poverty.

For some women, pregnancy and childbirth can be a death sentence. In many of the countries where Concern works, access to quality maternal healthcare is poor. Pregnant and lactating mothers face a multitude of barriers when seeking care, from not being allowed to go to a clinic without a male chaperone to receiving poor or even abusive care from a doctor. This is especially true for adolescent girls aged 18 and under, leaving mothers-to-be and their children at increased risk for disease and death.

5. LITTLE OR NO ACCESS TO CLEAN WATER, SANITATION, AND HYGIENE

Currently, more than 2 billion people don’t have access to clean water at home. This means that people (which is to say, women and girls) collectively spend some 200 million hours every day walking long distances to fetch water. That’s precious time that could be used working, or getting an education to help secure a job later in life.

Contaminated water can also lead to a host of waterborne diseases, ranging from the chronic to the life-threatening. Poor water infrastructure — such as sanitation and hygiene facilities — can compound this, or create other barriers to escaping poverty, such as keeping girls out of school during menstruation.

6. CLIMATE CHANGE

Climate change creates hunger , whether through too little water (drought) or too much ( flooding ), and its effects contribute to the cycle of poverty in several other ways including disproportionately affecting women, creating refugees, and even influencing conflict. One World Bank estimates that climate change has the power to push more than 100 million people into poverty over the next decade.

Many of the world’s poorest populations rely on farming or hunting and gathering to eat and earn a living — for example, Malawi is 80% agrarian. They often have only just enough food and assets to last through the next season, and not enough reserves to fall back on in the event of a poor harvest. So when climate change or natural disasters (including the widespread droughts caused by El Niño ) leave millions of people without food, it pushes them further into poverty, and can make recovery even more difficult.

7. LACK OF EDUCATION

Not every person without an education is living in extreme poverty. But most of the extremely poor don’t have an education. There are many barriers to education around the world , including a lack of money for uniforms and books, a bias against girls’ education , or many of the other causes of poverty mentioned here.

But education is often referred to as the great equalizer, because it can open the door to jobs and other resources and skills that a family needs to not just survive, but thrive. UNESCO estimates that 171 million people could be lifted out of extreme poverty if they left school with basic reading skills. Poverty threatens education, but education can also help end poverty .

8. POOR PUBLIC WORKS AND INFRASTRUCTURE

Imagine that you have to go to work, but there are no roads to get you there. Or heavy rains have flooded your route and made it impossible to travel. A lack of infrastructure — from roads, bridges, and wells, to cables for light, cell phones, and internet — can isolate communities living in rural areas. Living off the grid often means living without the ability to go to school, work, or the market to buy and sell goods. Traveling further distances to access basic services not only takes time, it costs money, keeping families in poverty.

Isolation limits opportunity. Without opportunity, many find it difficult, if not impossible, to escape extreme poverty.

ISOLATION LIMITS OPPORTUNITY.

9. LACK OF GOVERNMENT SUPPORT

Many people living in the United States are familiar with social welfare programs that people can access if they need healthcare or food assistance. But not every government can provide this type of help to its citizens — and without that safety net, there’s nothing to stop vulnerable families from backsliding further into extreme poverty. Ineffective governments also contribute to several of the other causes of extreme poverty mentioned above, as they are unable to provide necessary infrastructure or healthcare, or ensure the safety and security of their citizens in the event of conflict.

10. LACK OF JOBS OR LIVELIHOODS

This might seem like a no-brainer: Without a job or a livelihood, people will face poverty. Dwindling access to productive land (often due to conflict, overpopulation, or climate change) and overexploitation of resources like fish or minerals puts increasing pressure on many traditional livelihoods. In the Democratic Republic of Congo (DRC) for example, most of the population lives in rural communities where natural resources have been plundered over centuries of colonial rule — while conflict over land has forced people away from their source of income and food. Now, more than half of the country lives in extreme poverty.

11. LACK OF RESERVES

All of the above risk factors — from conflict to climate change or even a family illness — can be weathered if a family or community has reserves in place. Cash savings and loans can offset unemployment due to conflict or illness. Proper food storage systems can help if a drought or natural disaster ruins a harvest.

People living in extreme poverty usually don’t have these means available. This means that, when a risk turns into a disaster, they turn to negative coping mechanisms, including pulling children out of school to work (or even marry ), and selling off assets to buy food. That can help a family make it through one bad season, but not another. For communities constantly facing climate extremes or prolonged conflict, the repeated shocks can send a family reeling into extreme poverty and prevent them from ever recovering.

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1 (page 1) p. 1 Introduction

• Published: July 2018
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Poverty is a global issue. There are people in every country with a standard of living that is significantly lower than that of others. Nevertheless, the absolute number of people living in poverty has decreased since 1990, especially in the poorest countries in the world. Therefore, there is reason to hope that further poverty reduction can occur. The Introduction outlines the pervasiveness and trends in poverty around the world; the many different causes of poverty that embed themselves in social, political, economic, educational, and technological processes, which affect all of us from birth to death; and considers why poverty matters. Overall, the economy suffers if systematic public policy does not address poverty.

Pervasiveness and trends

Poverty is a global issue. Travel to almost any country today and you will see people with a standard of living that is significantly lower than that of others. That fact is distressing and it has real consequences for adults and children living in poverty. Nevertheless, the absolute number of people living in poverty represents a marked improvement over that in 1990, especially in the poorest countries in the world. Therefore, there is reason to hope that further poverty reduction can occur.

N.B. $1.90 per day poverty line; dashes indicate insufficient data to determine. To account for differences in cost of living across regions, prices are set at 2011 purchasing power parity.

N.B. Number (in millions). $1.90 per day poverty line; dashes indicate insufficient data to determine. To account for differences in cost of living across regions, prices are set at 2011 purchasing power parity.

Poverty, however, is not restricted to the developing world. Developed countries have their own brand of poverty. We consider how that brand differs qualitatively from that in the developing world in Chapter 4 . Suffice it to say that people experience poverty in the developed world relative to those who are not poor that is akin, if not in kind, to those living in poverty in the developing world. Therefore, concern for expanding opportunities that might improve their well-being is justified. The past twenty-five years have yielded mixed results in poverty reduction in the developed world, as the United Kingdom and the United States exemplify.

Table 3 shows that while the poverty rate in the United Kingdom has fallen by 6 per cent, the number of people living in poverty has only dropped by two million in actual number. As in much of Western Europe, the concept of poverty reported here is a relative one. The poverty line is 60 per cent of median household income of the total population. In the United States, the poverty rate has been static over the past quarter century as shown in Table 4 . The number of people in poverty, however, has drifted upward in line with population growth. The US government bases its official poverty rate on a concept of poverty that is absolute, meaning that the poverty line reflects a fixed level of basic needs. In Chapter 3 , we spell out the differences between absolute and relative concepts of poverty. The important point to take away from Table 3 and Table 4 is that in the UK and the US, we see nothing like the progress against poverty that we have seen in the developing world.

N.B. The poverty rate is the number of people whose income falls below the poverty line divided by the population. The poverty line is 60 per cent of median household income of the total population. Income measure is before deduction of housing costs. Based on data from the Institute for Fiscal Studies, with kind permission.

N.B. The poverty rate is the number of people whose income falls below the poverty line divided by the population. The poverty line reflects a fixed level of basic needs.

Contextual aspects

Wood-burning stove in India.

Basic electric stove.

No one wants to live in poverty. Yet, many people do live in poverty. Why is that? Over time, observers have proposed many causes of poverty, including dysfunctional institutions, discrimination, low social capital, social exclusion, low human capital, social stratification, residential segregation, the business cycle, unemployment, low wages, poor health, culture, shifting norms about family structure, technological advance and industrialization, globalization and the expansion of international trade, holes in the social safety net, and anti-poverty policy itself.

Discrimination excludes people from resources and opportunity. Underlying it is the notion that something valuable like high-quality jobs, housing, education, or healthcare is scarce. The perception of scarcity can induce utilization of arbitrary characteristics such as race, gender, language, ethnicity, sexual orientation, or religious belief as a basis for restricting access to basic goods and services that sustain well-being. People who discriminate put members of the discriminated-against group at a disadvantage, particularly if the characteristic on which discrimination is based is readily observable. For example, if you live in a society where there is discrimination based on race and you are a member of a disfavoured racial group or caste, then your chances of restricted access to quality housing, healthcare, and a good job is higher, your level of education notwithstanding.

There are people who work regularly, sometimes holding down multiple jobs, yet live in poverty because their wages are low. According to economic orthodoxy, their low earnings are likely to reflect the fact that they are relatively unskilled and/or not well educated. That is, they have low human capital . The amount of human capital you possess is a function of past schooling, training, and experience. It is a determinant of how productive you are likely to be in the workplace. For example, if, because of your education and training, you are able to read, calculate, and write both quickly and effectively, then it is more likely that you will be highly valued by an employer. A manifestation of your value will be greater compensation relative to someone with less education. We can only go so far, however, with the viewpoint that productivity is the sole determinant of wages, earnings, or compensation. We know that other factors such as custom and bargaining power also matter. For example, just a few decades ago, it would have been unseemly for the chief executive officer of a firm to make more than thirty times the salary of the average staff employee. That ethos has eroded in many countries worldwide. Labour unions, once a bulwark against the power of management to set wages unilaterally, have seen a decline in membership and effectiveness to the detriment of workers at the lower end of the pay distribution.

More broadly, shifting norms about family structure mean that women and men have more options for arranging their social affairs. When we add children to the equation, women, in particular, are less constrained by custom to do what may not be in their best interest. In societies where women are paid less than men for comparable work and where there is weak public support for income maintenance during labour market absences due to childbearing, particular family structures, such as households headed by single women, are at higher risk of experiencing episodes of poverty.

Technological advance and industrialization have undoubtedly enriched us on average over the long run, but they have also been a source of displacement of workers with obsolete skills, farm workers, and artisans. For example, the Industrial Revolution in England saw the release of many skilled textile workers in the wake of the introduction of mechanized production methods. More recently, widespread use of computers and robotics induced the release of traditional assembly-line workers in manufacturing. Displaced workers with obsolete skills may integrate into the new economy slowly. The transition can be both immiserating and psychologically traumatic.

Globalization , the enhanced freedom of movement of people, goods, and capital, and the expansion of international trade , is a positive phenomenon on balance. Its benefits, however, are widely diffused. These benefits can seem insignificant compared to the losses experienced by those harmed by increased competition in trade. The benefits of globalization can be lower prices for goods and increased variety, which most consumers enjoy. Its costs can take the form of redundant production plants and equipment and localized job losses, especially when local labour is immobile. For example, the economist David Autor and his collaborators show that communities in the United States with industries that compete with cheap imports from China have experienced significant employment loss, wage declines, and an increase in transfer payments from government.

An opposing viewpoint is that holes in the social safety net cause persistent poverty. Most Western societies have a system of programmes designed to help those that it deems worthy of support (the so-called deserving poor). Historical examples include widows, orphans, and the elderly. Then, there are those that society deems undeserving of public support. Historically, these are prime-aged adults who do not appear to be contributing to society by working and paying their share of taxes. When job loss occurs because of the vicissitudes of life such as ill health (mental or physical) or acts of nature, then individuals and families with limited financial reserves are vulnerable regardless of their stage of life. A robust social safety net can be all that stands between sudden misfortune and destitution.

For some people, poor health is a chronic condition. Bad health, permanent mental or physical illness, or disability restricts them from carrying out normal activities of life such as dressing and bathing, much less working on a regular basis. Chronic physical or mental illness is debilitating. Individuals living with chronic illness are at greater risk of living in poverty, especially if they do not have the support of family and friends. Generally, they are unable to work. Leaves of absence to accommodate pain and recovery disrupt workflows and reduce an employee’s value to the firm. Absenteeism increases the likelihood of termination of employment.

This list of the causes of poverty is not exhaustive. It highlights, however, some of the complex issues and situations that push people into poverty and hold them there. Each individual or family has its own story. Some of these causes have received more factual support than others have. These causes embed themselves in social, political, economic, educational, and technological processes that affect all of us from the time we are born until we die. Our degree of vulnerability is all that differentiates us. How vulnerable you are or are not to adverse changes in your life is a function of the circumstances of your birth, including where your family lived, which schools you attended, whether it was peacetime or wartime, whether you had access to clean water, whether you are male or female. The list goes on and on.

Why poverty matters

Also in 2016, in the province of Kasserine, Tunisia, public protests over the high level of unemployment broke out after a young man, Ridha Yahyaoui, committed suicide because the government left his name off a list of candidates for a government job. The protesters’ demands were for jobs and a solution to the poverty gripping the province. The protest in Kasserine triggered protests in other cities in Tunisia, including the capital, Tunis. The government’s initial response was a nationwide curfew from sunset to sunrise. The aggregate unemployment rate in Tunisia had risen over the previous two years and in 2016 hovered around 15.5 per cent. This aggregate unemployment rate, however, masked the unemployment rate among young people with university degrees. That rate was closer to 30 per cent in 2016. The protesters in the streets were predominately young people who were desperate for jobs but could not find work. If these circumstances sound familiar, it is because they are; for it was in Tunisia in 2011 that mass demonstrations that we know now as the ‘Arab Spring’ began after the self-immolation of Mohamed Bouazizi in December 2010. In Tunisia, these demonstrations led to the toppling of the government of then-president Zine El Abidine Ben Ali.

Can a just society include many people living in poverty? The philosopher John Rawls provides one perspective on this question. His difference principle would allow an inequitable distribution of income as long as any further increment in inequality resulted in an increase in the absolute level of well-being of the poorest in society. It follows that in the design of public policy there would be no restriction on individual earnings or wealth. There would be scope, however, for redistribution of income to the neediest.

We know that attitudes about redistributive policies vary across countries. In the United States, the tendency to label any individual espousing favourable views about redistribution as ‘socialist’ circumscribes explicit political discourse on redistributive policies. In the European context, there is more space to advocate for redistributive policies. Increasingly, however, the narrative focuses on redistribution extending only to beneficiaries who are citizens. In the developing country context, frequently the government’s capacity to collect taxes is so weak that the idea of implementing redistributive policies is beyond the practical scope of society’s institutions.

Overall, the economy suffers if systematic public policy does not address poverty. Poverty imposes costs on the economy due to lost human capital and poor resource allocation. Poverty accelerates the depreciation of any economy’s most valuable resource, its people, by depriving them of quality healthcare and education. It drives people to engage in activities from begging to multiple low-wage jobs that are less than ideal, in the sense that they could spend their time more productively in specialized employment.

Poverty is a stain on the fabric of society. Widespread and persistent poverty can sow the seeds of discontent based on a loss of dignity associated with a feeling of exclusion from society. Feelings of indignity, alienation, and disrespect can fuel crime, large-scale public protests, and even extremist ideologies that lead to terrorism. Generally, removal or diminution of this stain requires public action by government with the consent and cooperation of the governed.

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Poverty in the World Report

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Introduction

The situation of poverty in the world, causes of poverty, efforts to fight poverty.

Poverty is described as a condition where an individual or individuals are not access to basic needs. When the term poverty runs into the minds of many people, they picture lack of food. Food is one of the main basic necessities that make people toil day and night. Poverty may differ from one person to the other and especially if it is measured in terms of what people consider as basic needs.

As much as people who are having some sought of shelter and food for their day many consider themselves poor, there are others who live a day at a time. They do not have a shelter and mainly live in the streets hoping that someone will drop something their way. They care less about their clothing and shelter and only wish they could get some food for their stomachs. Food being the main reference to the extremes of poverty, it comes with it many other situations that that are related to their conditions.

One of such issues is health which has a lot to do with what someone is eating and where they are staying. Places that are hard hit with poverty will also report a lot of cases of ill health due to poor leaving conditions. Other issues that are related to poverty include overpopulation, immorality and other criminal offences. In this paper, we will be looking at the situation of poverty in the world, its causes and the efforts of the international organizations to manage the same (Seabrook, p. 78).

The rate and extreme of poverty differs from one nation to the other. All this has a lot to do with the growth domestic product of the nation. Poverty in developing nations is different from that in developed nations. Despite this difference, it can not be denied that every nation and society has a group of people who can not manage their daily basic needs. The causes of such poverty vary from individual to individual. Extreme poverty was being experienced before industrial revolution due to high levels of illiteracy. It was hoped that after industrialization, the problem will be solved greatly.

Even though a lot has happened since then, poverty remains to be a crisis that takes a different shape even with modernization. Improvements in the field of technology are also making some people that would have otherwise been considered to be well off to be lacking in a way. The world is growing at a very faster rate and requires people to have something extra that will enable them manage the changes. For instance, in the past, being without shoes was considered to be poverty, but as shoes flood the market, it is now illiteracy that is considered as poverty. This is the main reason why poverty shall remain to be a permanent crisis that is likely to increase with improvements in technology.

Poverty has hindered especially many developing nations from achieving their goals and targets. There is so much exploitation especially by the leaders who take advantage of the situations that their people are into. Most African nations that have records of extreme poverty are also having poor leaders who are doing little to deliver their nations from the pain of poverty. What happens is that they get so much exited about their leadership positions that they forget what they promised their people. All over a sudden they find that they have so much at their disposal and feel that it is their time to make themselves rich.

There is a general fear especially among political leaders that they may go back to their former status if they don’t make good use of their political positions. They will hence ensure that they pump a lot of wealth into their accounts and make investments with the hope that even if they are not considered back, they will have enough for the coming years. Their remunerations may not always be enough for them to make such investments and will hence steal into the government coffers. The generated income that is usually supposed to improve the status of the people ends up in the pockets of greedy and selfish leaders (Kerbo, p. 97).

Poverty may be caused by a number of situations which differ with the environment and society. Poverty may be an unpredictable situation that may happen to a person unexpectedly. There may hence be two major cause of poverty, one that may be predictable and the other unpredictable. Some of the predictable causes of poverty may be illiteracy where by an individuals lacks the knowledge of earning a living and hence subjecting themselves to a lifetime of need. There are also cultural and religious believes that make certain categories of people to be poor.

For instance, some religious groups of people believe that lack of certain basic needs is a way of pledging allegiance to their gods. They will live a poor life by choice as a sign of showing, commitment to their faith. Other cultural beliefs subject people to poverty due to how they are looked at and their ways of living. For instance in some Asian communities, they believe in caste system where by some people are not supposed to own wealth. They can not be given some official duties to do despite their academic qualifications. They are also not allowed to venture into investments even if they manage to save enough (Myrdal, p. 86).

People may also find themselves into poverty due to other unpredictable situations such as accidents, wars or lose of their dependant. Accidents may render certain productive people of the society unproductive. That may either be paralyzed, have brain and spinal injuries, loose their limbs and legs and hence not being able to do what they used to do. A loss in any vital section of the body can affect an individually psychologically and mentally and hence leaving them at the mercies of other people. Such people, unless they get the support of their relatives, may end up borrowing to meet their daily needs.

Outbreak of war and violence may also make a dependent person to be poor. This is due to some of the situations that may come with such wars. Apart from destruction of property, other people may be displaced from their areas of locations. They will hence have to begin their lives a fresh which may not be easy to adjust. The pains of their situation many persist as long as there is still turmoil around them. This may be the most devastating time of their lives considering the means through which they found themselves poor (Bacci & Santis, p. 43).

Another cause of poverty especially in the modern world is the changes in the field of information technology. The world has mainly become a place of the swift and those who can adjust to the changes faster. People are adapting more sophisticated means of living which is leaving those with average facilities to feel out of place. Everything has become too technological that no one can live without it. There are no options for average facilities as business organizations adjust to manage competition. For most of the poor people that intensified their efforts to make their lives better still find themselves in similar situations as developments are made.

What they are now having which they can be proud of as a development, is what was being used by the rich probably five years ago. They may hence look at their own capacity and feel that they have advanced, but when a comparison is made with their richer counterparts, they realize that they still have along way to go. Due to such improvements, poverty may hence not be considered as an improvement in the living standards but rather the gap that distinguishes the rich from the rest. As long as such a strategy continuous to be used, poverty shall remain to be a lifetime battle (Kaul & Moschovitis, p. 98).

Poverty is not only a national issue but has been considered to affect the world economy. This is the basic reason why the international community is employing a lot of efforts to ensure that the situation is solved. Poverty is being fought at all levels of society that includes the community, district, national and international level. It is hoped that despite the challenges that people are going through, poverty will be minimized. Some of the tireless efforts that are considered to have an impact if they succeed are to educate communities about creating wealth and managing it.

This is especially in societies and people that believe that they were born to be poor. It is however very difficult to convince an individual or society that is inclined to religious and cultural beliefs to change their ways. It takes a lot of effort to empower such individuals and let them know that they can still pay allegiance to their beliefs. There is a need for the communities to wake up from past beliefs and brace up for the changes happening around. As inevitable as change is, some communities and individuals have resisted it and hence making them to wallow in more poverty.

Education is playing a vital role in informing the masses on the various options available for them to create wealth. This has seen people improve from their traditional and cultural inclination which was the main cause of poverty and adapting modern means of survival. Education has been made compulsory in most nations as support is granted especially to children to adapt basic education. Most countries have initiated free primary education, especially to the parents of children that can not afford it. This is one of the practical strategies that have recorded a lot of improvements in developing nations.

Parents are also being encouraged to take their children to school despite the contributions that have to earn a living. The implementation of free primary education in most developing nations was hindered by the fact that parents make their children to work and not allow them to go to school. Such a challenge has been fought by making child labour to be a criminal offence that is punishable under law (Townsend & Gordon, p. 67).

Another effort that is being implemented by the international community to minimize on poverty is finding alternative measures to utilize available resources. Overpopulation which has led to environmental degradation has been one of the serious causes of poverty in the world. Most organic resources are becoming extinguished making a large mass of people to fight for the little that are available. This has also made such resources to be too expensive for the average man to afford. Science and technology is launching into inventions that will ensure that people adapt lesser costly measures to carry out their activities. Reuse and the development of recycling industries are some of the efforts that are being utilized to the maximum to ensure that there is no unnecessary loss (Pogge, p. 123).

Poverty is mostly considered to be an individual issue whose pain can only be understood by them that are living or have lived in it. Anybody who has been there will not want to go back and those that are there are trying their best to come out of it. As personal as it may seem to be, it affects a larger community and will hence require the efforts of a larger community to fight.

One of the things that have hindered such progress is that fact that those that have the ability to deliver those in poverty from their situations can not understand their pleas. For those that were once in such situations and considered to be the best instruments of deliverance, forget everything as they concentrate on developing themselves. The paper has looked at the situation of poverty in the world, what causes it and the efforts of the international community to fight it.

• Bacci, Massim & Santis Gustavo. Population and poverty in the developing world. London: Oxford University Press, 1999.
• Kaul, Chandrika & Moschovitis, Valerie. Statistical handbook on poverty in the developing world. New York: Greenwood Publishing Group, 1999
• Kerbo, Harold. World poverty: global inequality and the modern world system. Michigan: McGraw-Hill, 2006.
• Myrdal, Gunnar. The challenge of world poverty: a world anti-poverty program in outline . Michigan: Pantheon Books, 1970.
• Pogge, Thoma. World poverty and human rights: cosmopolitan responsibilities and reforms . London: Polity, 2008.
• Seabrook, Jeremy. The no-nonsense guide to world poverty . New York: Verso, 2003.
• Townsend, Peter & Gordon, David. World poverty: new policies to defeat an old enemy. California: The Policy Press, 2002.
• Urban Relationship Between Poverty and Crime
• Social Security Strategies Reform Plan
• Concept of Poverty
• What Causes Poverty in the World
• Poverty in the US: Causes and Measures
• Mumbai Great Problem: Homelessness Problem in Cities
• South Africa and Kenya Development Project
• Social and Economic Policy Program: Globalization, Growth, and Poverty
• World Hunger: Cause and Effect
• Is Poverty From Developing Countries Imagined?
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, December 25). Poverty in the World. https://ivypanda.com/essays/poverty-in-the-world/

"Poverty in the World." IvyPanda , 25 Dec. 2021, ivypanda.com/essays/poverty-in-the-world/.

IvyPanda . (2021) 'Poverty in the World'. 25 December.

IvyPanda . 2021. "Poverty in the World." December 25, 2021. https://ivypanda.com/essays/poverty-in-the-world/.

1. IvyPanda . "Poverty in the World." December 25, 2021. https://ivypanda.com/essays/poverty-in-the-world/.

Bibliography

IvyPanda . "Poverty in the World." December 25, 2021. https://ivypanda.com/essays/poverty-in-the-world/.

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Poverty and Inequality in the World, Essay Example

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Poverty and inequality are two matters at all times influencing one another. Undoubtedly, where there is poverty there is also inequality happening on a social level.  These two terms, applied when discussing society in its entirety, are utilized to describe how inequality on an economical level affects social statuses, making room for let us say lucky groups, the ones able to afford almost anything and the unlucky, those who can barely make it from one day to another. Thereof, these two terms describe the cause and effect of the economic system, however complex it might be.

The main actors included in this process are, actually, the people living in the society and, also, the system at work in the society, by means of which people can or cannot get advantage insofar as to make their lives better. The actors included in the inequality process are, therefore, people on the one hand and, on the other hand, the economic system active in a particular society. This is exactly why the matter could not be discussed generally, but applied to each country in part.

The main focus of each scholar is that of identifying the most efficient strategies by means of each poverty to be avoided and inequality disposed of. However, given the complexity of the problem and the variety of variables which influence it, my standpoint is that no general strategy can be found, no strategy which, if applied anywhere, could solve such a sensitive matter. More precisely, distinct solutions should be sought and applied, afterwards, in each country in part.  I do not ignore the fact that relevant insights could be derived from one country which could aid solve the problem in another country, but that is not, under no circumstance, enough. In other words, global citizenship philosophy should be understood as the point of departure for the struggle of highlighting the efficient solutions towards eliminating inequality in societies.

Thereof, the main question I wish to bring to debate is that of identifying whether it would be more relevant that a united team of researchers would study a corpus of distinct societies in order to put together a strategy which would help eliminate inequality or that the same team of researchers would study the same country and its society, irrespective of the other insights derived from distinct societies, with the same scope. This question parts from the discussions in ”Globalization. A very short introduction”, by Manferd B. Steger. This made me realize that such a scope implies a numerous of variables to be taken into consideration and, however, contextualization, especially at a time in which globalization is rapidly escalating.

Probably, the most important aspect of such a research consists of the capabilities of the specialists of identifying the exact characteristics of each society in part which would affect, in any way, the rise of inequality. The presupposition stands clear. Each society has characteristics that influence the economic process, some of which are the great historical moments it went through, the collective mentality, the political system, the social intake of the differences between people, from the ways in which one can go from one social status to another until the way in which women are being viewed in comparison to men. Thereof, the question I propose stands relevant from the point of view that the strategy which, for example, would be applicable in a society in which women are expected to be paid far less than men occupying the very same positions would not be efficient in a society in which women are already highly emancipated and are not expected to be stay-at-home mothers for a long period of time.

Steger, B. “Manfred. Globalization: A Very Short Introduction.”

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More Money Can’t Solve Poverty

• Daily Economy
• Free Markets

I first came to economics out of a concern for poverty. I had been attracted to classical liberalism for its uncompromising defense of the rights and dignity of individuals, along with a healthy skepticism about power. Everything made sense to me: constitutional constraints, limited government, rule of law, political and economic freedom. One thing held me back: what about the poor? Could civil society provide sufficient relief? Might welfare be an exception, a collective action failure to be remedied by a limited state? 

I still remember discovering a quotation, drawn from a 1988 paper by economist Robert Lucas . It was one of a half dozen or so quotations that seems to define one’s own life better than one could ever do oneself: “Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? If so, what, exactly? If not, what is it about the ‘nature of India’ that makes it so? The consequences for human welfare involved in questions like these are simply staggering. Once one starts to think about them, it is hard to think about anything else.”

It turns out that the story is as simple as it is beautiful; it is the story that Angus Deaton has dubbed “ the great escape ” from poverty. It is a story of ideas unleashing markets and technology (what Deirdre McCloskey has dubbed “ the bourgeois virtues “). Poverty was the natural condition of humanity for 99.9 percent of its 200,000-year existence. Sometime around 200 years ago, some people in some countries started to escape. Gradually, more people in those countries, and people in more countries, escaped too. The late Hans Rosling offers an enthusiastic, almost giddy, visualization of the story.

When faced with bunk whining that capitalism is evil, because it didn’t include everybody immediately, I share Martin Luther King’s 1963 “I Have a Dream” speech:

In a sense we have come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men — yes, Black men as well as white men — would be guaranteed the unalienable rights of life, liberty and the pursuit of happiness. It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check which has come back marked insufficient funds. But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so we’ve come to cash this check — a check that will give us upon demand the riches of freedom and the security of justice.

After 199,800 years of poverty, capitalism — free markets, classical liberalism, the Enlightenment project, call it what you will — started lifting people out of poverty. It has not fully succeeded. Not yet. After all, it has not been given much time. And it faces skeptics and enemies everywhere. Freedom House reports that we are in the 18 th year of democratic decline around the world. A decade of growth in economic freedom was erased in 2020, as governments around the world addressed the pandemic with spending and regulation (which were supposed to be temporary). Anti-globalization forces on the left and right are threatening to push back 70 years of progress since World War II, the increasing “ extent of the market ” that lifted billions out of poverty. In 1820, almost 100 percent of the world’s one billion people were living in extreme poverty. In 1950, it was about 75 percent of the world’s two billion people. Today, it’s less than 10 percent of the world’s seven billion. Three cheers for markets! 

The Poor with Us Always

Despite this stunning progress, poverty remains. Why? Matthew Desmond, a sociologist at Princeton University, thoroughly examines the question. The book has serious flaws, but it offers a wake-up call.

Desmond reminds us that one in nine Americans is poor. He walks us through poverty and its daily assaults on stability, growth, health, and morale. It is expensive to be poor: fines accumulate on unpaid vehicle registrations; jobs are lost from unaffordable car repairs; mass incarceration kills income; the unbanked are saddled with high-interest payday loans; the poor are excluded from affluent neighborhoods, and stuck in a cycle of eviction and neglected housing; because public schools are financed by local property taxes, the poorest don’t get a good basic education; health insurance is tied to full-time work, so preventive care is often neglected, and medical catastrophe can lead to bankruptcy. 

To be sure, governments at all levels are spending — a lot — on poverty. The US welfare state (as a percentage of GDP) is the second biggest in the world, after France. But the welfare state is a sieve, and welfare programs are poorly designed and cumbersome.

Desmond is probably exaggerating the problem; it’s unclear whether he’s intentionally playing with statistics to bolster his case, or if — as a sociologist — he is more concerned with pathos than logos . For example, he pooh-poohs the drop in the price of almost everything, because “[y]ou can’t eat a cell phone.” Yet food expenditures fell from one third of income to 9 percent in the last century.

Unfortunately, the book suffers from two fatal flaws. First, Desmond does not understand markets, and sees the world as a zero-sum game; second, he does not understand the unintended consequences of intervention.

Desmond asserts that poverty persists because “we” — the middle class and the wealthy — benefit from it. Consumers want cheap stuff and corporations want high profits, so wages are kept low. Unions are repressed by greedy corporations. The gig economy leaves workers unprotected, but it’s convenient and cheap. We don’t want poor people living next to us, so we keep them out with zoning laws. Corporations and “the wealthy” have rigged the system to avoid paying their “fair share” of taxes. The wealth “hoarded” by the wealthiest excludes the poorest and serves as an excuse not to implement real change. Et caetera . In sum, “Defenders of the status quo, this pro-segregationist propertied class, have shown themselves to be willing to do the tedious work of defending the wall.” “Our abundance causes others’ misery.” Well.

The problem is reality: markets are a not a zero-sum game, but a positive-sum game. Jean-Baptiste Say and Henry Ford famously saw the link between worker and consumer. The real problem is that the poor are excluded from markets, mostly by the same well-intentioned government programs that Desmond champions. 

Desmond would solve poverty in America with “ambitious interventions” — “we should go big.” But he ends up proposing more of the same government interventions that cause poverty in the first place (and that he himself admits are inefficiently administered). Lest I appear to be a market radical or a bourgeois apologist for my comfortable life and the taxes I refuse to pay to help the poor, let’s look at some examples.

Unions increase wages for their members — at the expense of non-members. They are a drag on productivity and growth, leading to a less dynamic economy and lower employment. Sustainable wage increases come from productivity gains and human capital accumulation, not legalized bullying. Alas, teachers’ unions have completely deflated high school education; federal intervention is gutting higher education. The poor need fewer unions, more vibrant labor markets, and better education.

Inflation-adjusted prices have dropped significantly over the past fifty years — with the notable exception of three sectors: healthcare, education, and housing. Desmond laments this. But he does not recognize that these are three of the most subsidized and regulated sectors of the economy. Subsidies increase demand, and thus prices. Regulation decreases supply, increasing prices. Clearly, there is a problem. Clearly, even more government isn’t the solution. Consider that — before Obamacare — almost half of healthcare was already paid for by government funds. Consider the higher education bubble, where federal intervention has driven up prices and driven down quality.

Desmond rightly laments the injustice of exclusionary zoning regulations. Unfortunately, he also prescribes inclusionary zoning (forcing builders to include low-income housing in any new project). The unintended consequences should not be hard to predict. And let us not forget that massive government intervention to increase home ownership among the poor has already been tried. Pre-2007 US housing policy — the deadly cocktail of Community Reinvestment Act, lower lending standards and moral hazard through Freddie Mac and Fannie Mae, and federal encouragement of subprime loans – did indeed briefly increase home ownership among the poorest Americans. They were also the ones who suffered the most when the inevitable crash followed the boom.

Payday loans are ugly, but they are often the only available option. Regulating them would make things worse, killing credit or driving the most vulnerable into black markets. Instead of banning them, we should make them irrelevant. Alas, federal and state regulations limit banking competition, driving up prices. The Durbin Amendment to the Dodd-Frank Act of 2010 capped debit card interchange fees. In the spirit of Frédéric Bastiat , what is ‘seen’ is a policy to help the poor. What is not seen is the increase by a whopping million of unbanked Americans , who were forced out when banks recuperated their losses by increasing fees on other services. Banks were able to do so because Dodd-Frank ended up increasing US banking concentration (as I demonstrate in a working paper with my AIER colleague Michael Makovi).

The COVID rescue packages that Desmond would like to make permanent may have worked in the short run. But they cost the federal government $5 trillion it didn’t have. So the Federal Reserve monetized the debt, driving inflation to 40-year highs. While inflation is now tamed, prices remain 20 percent higher than they were four years ago — with disproportionate effects on the poor, of course.

Although he isn’t an economist, Desmond did his homework on minimum wage. He gleefully concludes that George Stigler’s seminal work on the disemployment effects of minimum wages — along with pretty much all of microeconomic theory — was debunked by the famous 1994 Card and Krueger paper. But the arguments in that paper are, at best, “tiny pulls in the intellectual tug-of-war to accurately predict the outcome of a minimum wage policy change. And there are more… and stronger, tugs on the side that says minimum wage increases hurt employment.” Back to Bastiat, minimum wages are good for the workers who can secure them and bad for the workers who are priced out of the labor market — and especially those who are permanently excluded from their first job, with disastrous, lifelong consequences. Witness understaffed European stores and the proliferation of kiosks to replace expensive fast-food workers. As Henry Hazlitt explained, “we cannot make a man worth a given amount by making it illegal for anyone to offer him less. We merely deprive him of the right to earn the amount that his abilities and opportunities would permit him to earn, while we deprive the community of the moderate services he is capable of rendering.”

The failure of government anti-poverty programs is captured in a single fact that Desmond completely overlooks. The US poverty rate has indeed dropped a bit since 1964 , when President Johnson declared a War on Poverty, and started a six-decade spending spree. But the real story happens before 1964. As markets were liberated to work their magic — after the twin assaults of the New Deal and the wartime economy — US poverty dropped dramatically. From a high of almost 35 percent after World War Two, the poverty rate had already fallen to 19 percent in 1964. It continued its downward trend over the next few years, then has stagnated between 10 percent and 15 percent ever since.

Getting in the Way of Growth

Markets are the world’s greatest anti-poverty program. Alas, the government keeps bumbling in the way. Part of this stems from the unintended consequences of good intentions — and part of this stems from cronyism. Desmond rightly points out that the top 20 percent of earners receive $35,000 in annual government benefits, while the bottom 20 percent receive only $26,000. He is playing a bit with the numbers, as he includes not just direct transfers, but also tax deductions, which the middle class is better at capturing . But he has a point; everybody has a snout in the trough of wealth redistribution, as political activity is increasingly rewarded over economic activity. As I have written in this space , it “is no coincidence that three of the five richest counties in the US (and nine of the top 20) are located in the Washington, DC area — an area with little native industry, beyond spewing regulatory externalities.”

The fundamental problem is not a lack of funding to address poverty, as Desmond would have us believe, but government failure. Mass incarceration, qualified immunity of police, and overcriminalization co-exist with failure to provide security and rule of law in poorer neighborhoods. State interventions have rendered high school education largely useless and college too expensive. Labor laws, minimum wages, occupational licensing, and other regulations with regressive effects deny workers the opportunity earn a living and work their way out of poverty. Zoning laws and a thousand subsidies and regulations drive up housing prices, keeping the poor out of thriving neighborhoods, and out of good schools that are linked to real estate. The welfare state has crowded out a once-vibrant and effective civil society (Desmond is surprisingly silent on civil society and private charity, as he is so enamored with state solutions).

Art Thou for Us, or For Our Adversaries?

Given the book’s tragic flaws, Desmond’s emotionalism, accusations of complicity in exploitation of the poor, and with-me-or-against-me fallacy, end up being grating, rather than inspiring. Still, he is describing a real problem, and unintentionally making the case for markets.

It’s not always clear which bad policies come from the unintended consequences of good intentions, and which are naked attempts at rent-seeking. But it doesn’t matter. It’s time to stop rearranging the deck chairs on the Titanic. The poor deserve nothing less than the opportunity to participate in the great escape.

Nikolai G. Wenzel

Nikolai G. Wenzel is Professor of Economics at Universidad de las Hespérides and Associate Research Faculty Member of the American Institute for Economic Research.  He is a research fellow of the Institut Economique Molinari (Paris, France) and a member of the Mont Pelerin Society.

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Essay on World Poverty

Students are often asked to write an essay on World Poverty in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on World Poverty

What is world poverty.

World poverty means that many people in different countries do not have enough money to buy what they need to live. They might not have enough food, a safe place to live, or access to doctors when they are sick. This is a big problem that affects millions of people around the world.

Why Does Poverty Happen?

What can we do.

To help reduce poverty, people can donate money or time to organizations that help those in need. Governments can also work together to make policies that help people get jobs and education. By working together, we can make a big difference in fighting poverty around the world.

250 Words Essay on World Poverty

World poverty means when people in many parts of the world do not have enough money to buy things they need like food, clothes, and a place to live. It is a big problem that affects millions of people around the world. Some people are so poor that they cannot go to school or see a doctor when they are sick.

Causes of Poverty

Effects of poverty.

Living in poverty is very hard. People who do not have enough money cannot buy enough food, which can make them very sick. Children might not be able to go to school, which means they cannot learn the skills they need to get good jobs when they grow up. This can make it hard for them to escape poverty.

How to Help

There are many ways to help fight poverty. Governments and organizations around the world are working to create jobs and provide education and healthcare to poor communities. People can also help by donating money or time to charities that support those in need.

In conclusion, world poverty is a big problem that needs everyone’s attention. By working together, we can help make the world a better place for everyone.

500 Words Essay on World Poverty

Understanding world poverty.

Many people around the world do not have enough money to buy food, clothes, or a house. This situation is called poverty. Poverty is a big problem in many countries. It means not having enough to live a healthy and comfortable life. Imagine not knowing where your next meal will come from or living in a place that is not safe or clean. This is a reality for a lot of people in the world.

Reasons Behind Poverty

There are many reasons why poverty exists. In some countries, there are not enough jobs for everyone. This means people cannot earn money to take care of their families. In other places, schools may not be good, so children cannot learn properly. When they grow up, it becomes hard for them to find good jobs. Sometimes, countries face big problems like wars or natural disasters. These events can destroy homes and businesses, making it even harder for people to make money.

What Can Be Done?

Governments and organizations around the world are trying to help people who live in poverty. They give food, money, and other kinds of help. Schools and training programs are important too. They can teach people how to do different jobs. This way, they can earn money and take care of their families. Everyone can help fight poverty. Even small actions like donating clothes or volunteering can make a big difference in someone’s life.

Hope for the Future

Fighting poverty is not easy, but there is hope. Many people and groups are working hard to make things better. For example, some companies are building factories in poor areas. This creates jobs for the local people. Scientists and doctors are also helping by finding ways to keep people healthy, even if they do not have a lot of money.

If you’re looking for more, here are essays on other interesting topics:

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Poverty Around The World

Author and page information.

• by Anup Shah
• This page last updated Saturday, November 12, 2011
• This page: https://www.globalissues.org/article/4/poverty-around-the-world .
• https://www.globalissues.org/print/article/4

On this page:

Introduction, world bank’s poverty estimates revised, inequality in industrialized nations, inequality in the us, inequality, globalization and a new global elite, inequality in cities around the world, inequality in rural areas, inequality between genders, inequality and health, inequality fueled by many factors, inequality increases social tensions, fragile democracies, inequality turn good people to evil, the wealthy and the poor, the world bank and poverty, poverty in industrialized countries.

What does it mean to be poor ? How is poverty measured? Third World countries are often described as developing while the First World, industrialized nations are often developed . What does it mean to describe a nation as developing ? A lack of material wealth does not necessarily mean that one is deprived. A strong economy in a developed nation doesn’t mean much when a significant percentage (even a majority) of the population is struggling to survive.

Successful development can imply many things, such as (though not limited to):

• An improvement in living standards and access to all basic needs such that a person has enough food, water, shelter, clothing, health, education, etc;
• A stable political, social and economic environment, with associated political, social and economic freedoms, such as (though not limited to) equitable ownership of land and property;
• The ability to make free and informed choices that are not coerced;
• Be able to participate in a democratic environment with the ability to have a say in one’s own future;

Human development is about much more than the rise or fall of national incomes. It is about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests. People are the real wealth of nations. Development is thus about expanding the choices people have to lead lives that they value. And it is thus about much more than economic growth, which is only a means—if a very important one—of enlarging people’s choices.

At household, community, societal, national and international levels, various aspects of the above need to be provided, as well as commitment to various democratic institutions that do not become corrupted by special interests and agendas.

Yet, for a variety of reasons, these full rights are not available in many segments of various societies from the richest to the poorest. When political agendas deprive these possibilities in some nations, how can a nation develop? Is this progress?

Politics have led to dire conditions in many poorer nations. In many cases, international political interests have led to a diversion of available resources from domestic needs to western markets. (See the structural adjustment section to find out more about this.) This has resulted in a lack of basic access to food, water, health, education and other important social services. This is a major obstacle to equitable development.

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In August 2008, the World Bank presented a major overhaul to their estimates of global poverty , incorporating what they described as better and new data.

The World Bank’s long-held estimate of the number of people living on the equivalent of $1 a day has now been changed to $1.25 a day.

The World Bank also adds that the previous $1 a day estimate for the international poverty line would have been $1.45 a day at 2005 prices if only inflation was accounted for.

The revised estimates include a lot more recalculations and the $1 a day measure used in some of the charts below are therefore not to be confused with the old $1 a day measure, and where available, a $1.45 measure is also provided as well as a more current $1 a day measure. (Because some developing countries also have poverty lines at $2 and $2.50 a day, those are also shown, where available.)

At a poverty line of $1.25 a day, the revised estimates find

• 1.4 billion people live at this poverty line or below
• This is more than the previous estimate of 984 million with the older measure of a $1 a day in 2004
• In 1981, the estimated number of poor was also revised upward, from 1.5 billion to 1.9 billion

The World Bank notes that the incidence of poverty in the world is higher than past estimates have suggested. The main reason is that [previous data] had implicitly underestimated the cost of living in most developing countries.

The data also does not reflect the recent global food crisis and rising cost of energy, which is feared will bring another 100 million into poverty.

Accounting for the increased population between 1981 and 2005, the poverty rate has, however, fallen by about 25%.

While this at least sounds encouraging, it masks regional variations, and perhaps most glaringly the impact of China:

• China’s poverty rate fell from 85% to 15.9%, or by over 600 million people
• China accounts for nearly all the world’s reduction in poverty
• Excluding China, poverty fell only by around 10%

As a result, the World Bank feels that while China is on target to reach the Millennium Development Goals to reduce poverty and tackle various other issues, most other countries are not.

Here are the World Bank’s new estimates of poverty at different poverty levels:

Different poverty levels

Data in other graph formats.

Poverty lines shown here include $1 a day, $1.25 a day, $1.45 a day, $2 a day (typical for many developing countries), $2.50 a day (which includes a poverty level for some additional countries), and $10 a day, which a World Bank report referred to if looking at poverty from the level of a wealthy country, such as the US.

As a pie chart showing how many people fall into each poverty level:

As a stacked bar chart:

But even with some poverty reduction, inequality is quite high in many regions around the world:

Inequality is not just bad for social justice, it is also bad for economic efficiency

While poverty alleviation is important, so too is tackling inequality. Inequality is often discussed in the context of relative poverty, as opposed to absolute poverty.

That is, even in the wealthiest countries, the poor may not be in absolute poverty (the most basic of provisions may be obtainable for many) or their level of poverty may be a lot higher than those in developing countries, but in terms of their standing in society, their relative poverty can also have serious consequences such as deteriorating social cohesion, increasing crime and violence, and poorer health.

Some of these things are hard to measure, such as social cohesion and the level of trust and comfort people will have in interacting with one another in the society. Nonetheless, over the years, numerous studies have shown that sometimes the poor in wealthy countries can be unhappier or finding it harder to cope than poor people in poorer countries.

In the context of tackling poverty then, the Overseas Development Institute (ODI) for example sees poverty reduction as a twin function of

• The rate of growth, and
• Changes in income distribution.

The ODI also adds that as well as increased growth, additional key factors to reducing poverty will be:

• The reduction in inequality
• The reduction in income differences

A few places around the world do see increasing rates of growth in a positive sense. But globally, there is also a negative change in income distribution. The reality unfortunately is that the gap between the rich and poor is quite wide in most places. For example:

• About 0.13% of the world’s population controlled 25% of the world’s assets in 2004.
• The wealthiest 20% of the world’s population consumes 76.6% of the world’s goods while 80% of humanity gets the remainder.

(See poverty facts and stats on this site for more examples.)

Professors Richard Wilkinson and Kate Pickett, from the Equality Trust , produced an informative lecture video titled Inequality: The enemy between us? based on their recently released book, The Spirit Level; Why More Equal Societies Almost Always Do Better (Penguin, March 2009).

In the lecture, compelling evidence is presented by the two professors that once nations are industrialized, more equal societies almost always do better in terms of health, well-being and social cohesion and that large income inequalities within societies destroys the social fabric and quality of life for everyone:

As they studied the data for industrialized nations, they noticed a clear tendency for countries which do badly (or well) on one outcome to do badly (or well) on others.

They looked at a wide range of health and social problems and found that,

• Outcomes are substantially worse in more unequal societies
• The problems tend to move together, implying that they share an underlying cause
• Whether their findings are tested internationally among the rich countries, or among the 50 states of the USA, there is almost always the same tendency for outcomes to be much worse in more unequal societies.

As they note in a presentation of their findings :

• Health is related to income differences within rich societies, not between them
• Health and social problems are worse in more unequal countries
• Health and social problems are not related to average income in rich countries
• Child well-being is better in more equal rich countries
• Child well-being is unrelated to average incomes in rich countries
• Levels of trust are higher in more equal rich countries
• The prevalence of mental illness is higher in more unequal rich countries
• Drug use is more common in more unequal countries
• Life expectancy is longer in more equal rich countries
• Infant mortality rates are higher in more unequal countries
• More adults are obese in more unequal rich countries
• Educational scores are higher in more equal rich countries
• Teenage birth rates are higher in more unequal rich countries
• Homicide rates are higher in more unequal rich countries
• Children experience more conflict in more unequal societies
• Rates of imprisonment are higher in more unequal societies
• Social mobility is higher in more equal rich countries
• More equal societies are more innovative
• More equal countries rank better on recycling

An interesting point they make is that economic growth alone — which is supposed to raise the income of all — is not necessarily a good determinant of life-expectancy and well-being: individuals in some developing countries can attain a level of life-expectancy comparable to industrialized nations even when their income may be far lower:

In other words, economic growth is important when developing, but after that equality may be more important .

The following graphs (reproduced with kind permission) are just examples of the problems they looked at, but the trends are always the same: the more unequal the society, the worse the problem generally :

From the source for the above graph, the Equality Trust notes that, The link between inequality and homicide rates has been shown in as many as 40 studies, and the differences are large: there are five-fold differences in murder rates between different countries related to inequality. The most important reason why violence is more common in more unequal societies is that it is often triggered by people feeling looked down, disrespected and loss of face.

The next example compares social mobility (the ability for someone to move up the social ladder, escape poverty etc) with inequality:

It may be surprising to see the US at the low end of social mobility when it is touted as the land of dreams and possibilities for anyone, no matter who they are. The UK is also surprisingly at the low end.

Interestingly, the US and UK are the biggest proponents of neoliberal economic ideology, which has often played down concerns about inequality and instead focused more on raising the lot for everyone (as the interview with Tony Blair noted further below reveals). Yet, the Equality Trust finds that,

It looks as if the American Dream is far more likely to remain a dream for Americans than it is for people living in Scandinavian countries. Greater inequalities of outcome seem to make it easier for rich parents to pass on their advantages. While income differences have widened in Britain and the USA, social mobility has slowed. Bigger income differences may make it harder to achieve equality of opportunity because they increase social class differentiation and perhaps prejudice.

The implications of all these findings are important in many ways. For example, it is often said that to develop and industrialize, developing nations’ carbon emissions must increase, as industrialization implies a more energy-intensive economy. However, what is less discussed is whether that means carbon emissions of poorer countries must be similar to today’s industrialized nations.

Many of today’s industrialized nations are often seen as over consuming with respect to the planet’s health ( climate change being something largely a result of greenhouse emissions from wealthier nations, for example).

As the next graph shows, a number of developing nations have achieved average life expectancies that are close to industrialized nations, but with far less carbon emissions in the process:

Addressing inequality implies tackling many, many social, political, economic and environmental issues, for they are all inter-related in many ways.

(Interestingly, the data they used for the study came from the early 2000s, so are not distorted by the global financial crisis that started around 2008.)

Further below there is more about poverty in industrialized nations, but first, some more on inequality.

The US for a long time has had the largest gap and inequality between rich and poor compared to all the other industrialized nations . For example in 2003, the top 1% received more money than the bottom 40% with the gap widest in 70 years. Furthermore, in the last 20 years while the share of income going to the top 1% has increased, it has decreased for the poorest 40%.

Inter Press Service also summarizes an updated report by the US Census Bureau that 1 in 7 people in the US are in poverty . In 2009, 43.6 million people — 14.6 percent of the population — were living in poverty in the U.S., up from 13.2 percent of the population in 2008. The United States currently has the highest number of people in poverty it has ever had since the government began counting in 1959, although the percentage of people this represents is lower than it was then (due to the increased population size since then).

IPS also notes factors such as the global financial crisis, stagnant wages and more contribute to this deepening poverty. But the article also adds that the poverty estimate may be understated because of assumptions made in calculations years ago and changes in costs of living since then as well as regional differences.

The US Congressional Budget Office released updated figures for US household income between 1979 and 2007 which showed that the top 1% were driving the main increases in income. Their income had grown some 275% over that period, some 7 times more than the remaining 99%.

This is likely to add fuel to the so-called Occupy protest movement in the US and around the world , where in the US in particular, we are the 99% (or its variations) are popular slogans in the protests against the current economic conditions and those who largely caused it or are benefiting from it.

Factors included more market income in the top percentages, a larger increase in wage rates for those at the top, increases in corporate pay, the expansion of technology disproportionately benefiting those at the top, increasing pay for those working in the financial and legal professions, the expansion of financial services, etc.

The report notes similar findings to that in earlier years, mentioned further above that the top 1% received more than the bottom 40%:

As a result of that uneven income growth, the share of total after-tax income received by the 1 percent of the population in households with the highest income more than doubled between 1979 and 2007, whereas the share received by low- and middle-income households declined…. The share of income received by the top 1 percent grew from about 8 percent in 1979 to over 17 percent in 2007.… In 2007, those shares were 53 percent and 47 percent, respectively. In 1979, the top 1 percent received about the same share of income as the lowest income quintile; by 2007, the top percentile received more than the lowest two income quintiles combined.

Nobel prize winner for economics, Paul Krugman, comments on earlier CBO data that even within the top 1% the big gains have gone to the top 0.1% . The 99%/Occupy protest movement is aiming too low he remarks!

Krugman also notes that lack of education is not a driving factor for inequality in the US as some have argued. Instead, inequality in America is mainly a story about a small elite pulling away from everyone else, including ordinary college grads.

In a short follow-up , Krugman adds that the change in income share in that period shows that just about all of the redistribution has taken place from the bottom 80 to the top 1. And stressing his point about education, It’s a tiny minority, not a broad class of well-educated Americans, who have been winning here.

Noting that around the world there is a new global working wealthy dominating the new global elite, an earlier New York Times article notes for the US that the gap [in the US] between the super rich and everybody else is now greater than at any time since before the Depression of the 1930s . Furthermore, The richest one-hundredth of 1 percent of American families — about 15,000 — accounted for less than 1 percent of national income in 1974. By 2007, the figure was 6 percent, according to Tyler Cowen, an economist at George Mason University outside Washington. That difference translates into hundreds of billions of dollars.

Countries like Russia have been seen as having an oligarchical structure. But for a while many have talked of countries like the US also showing similar patterns. And so a long-time concern is that a lot of this increased concentration in wealth is not just from successful business practices, but collusion, corruption and undue influences:

One concern some economists express about the emergence of a global plutocracy is that it may be driven, not only by seemingly benign forces like the technology revolution and global trade, but also by malign ones, particularly the elite’s ability to shape government and other public policy activities in its own self-interest. … The rise of government-connected plutocrats is not just a phenomenon in places like Russia, India and China. The generous government bailouts of United States financial institutions prompted Simon Johnson, a professor of economics at the Massachusetts Institute of Technology, to compare American bankers with emerging-market oligarchs. In an article in The Atlantic magazine, which he later expanded into a book, Mr. Johnson wrote that American financiers had pulled off a quiet coup.

Globalization has, as noted above, benefited a new working elite globally, not just in the US. They have largely pulled away from their compatriots , even in more egalitarian countries, such as Germany and various Scandinavian countries, while those already with large inequality in emerging developing countries are getting more unequal too.

An analysis of over 43,000 transnational corporations (TNCs) has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy . Of those companies,

• There was a core of 1318 companies with interlocking ownership
• The 1318 companies represents around 60 per cent of global revenues by collectively owning through their shares the majority of the world’s large blue chip and manufacturing firms — the “real” economy
• An even tighter 147 (about 1%) of these were described as super entities that controlled 40 per cent of the total wealth in the network.

The problem with such super concentration is that a small minority can influence the world system disproportionately — what is good for them is not necessarily good for everyone else, for example. In addition, given the enormous position in the world system, a problem in just a handful of them can, and have, had a terrible effect on the rest of the economy as the current financial crisis has shown.

Adam Smith, who was amongst the first to argue for free markets, had also warned against the impacts and undue influences of such concentration, but it would seem the modern TNCs have, in his name, achieved the same position.

Inequality is usually associated with poorer, developing nations. But for many years, studies have shown that many wealthier nations also suffer from inequality, sometimes at levels similar to those of some developing countries.

For example, the UN Habitat’s State of the World’s Cities 2008/2009 report has found that disparities within cities and between cities and regions within the same country are growing as some areas benefit more than others from public services, infrastructure and other investments.

In addition, and almost counter to conventional wisdom, the report finds that cities with high levels of inequality increases the chance that disparities get worse with economic growth, not get reduced. This is because high levels of urban inequality have a dampening effect on economic growth and contribute to a less favorable environment for investment.

The report also added that in such cities, the lack of social mobility tends to reduce people’s participation in the formal sector of the economy and their integration in society. This exacerbates insecurity and social unrest which, in turn, diverts public and private resources from social services and productive investments to expenditures for safety and security.

In another UN Habitat report, the issue of equality was noted:

As a municipal official, one has to decide whether to spend taxpayers’ money on road infrastructure, which in developing cities mostly serves higher income citizens with cars, or to spend it on public utilities and amenities, thus providing for a majority of the population, particularly benefiting the poor. This is why the major issues for today’s cities have to do with equality and politics, rather than engineering alone.

Factoring in democratic principles also makes things harder: Government has many roles but a fundamental one, in democracy, is to build equality. For legitimacy to exist in society, citizens must perceive that inclusion and equality are fundamental objectives of public authorities. (p.9)

Yet different priorities and interests easily result. For example, the report adds that in many developing cities, wealthier citizens live in private spaces and may even avoid visiting or walking around in city centers. As a result, they do not care much about city’s parks or public schools but may be more interested in better roads, for example.

There is therefore a dilemma that the public sector faces compared to the private sector: for the private sector, deciding where to invest usually boils down to where the best returns will be. By contrast, in the public sector every project is ‘good’, a police station, a road, a school or a park all provide a benefit which is difficult to measure.

In parallel with growing cities are growing informal settlements or slums. Numerous factors create this rise, from poverty in the countryside, changes towards neoliberal economic ideology, corruption, globalization factors and so on. The problem is so immense that, according to UN Habitat, approximately 1 billion people live in slums in the cities of the world — approximately 1 in every 6 people on the planet.

While there have been some successes in reducing the number of people living in such areas in recent years by about a tenth (mostly in China and India), numerous problems persist.

Without the ability to make their voices heard, people in informal settlements often find that in addition to less services, the threat of forced eviction is commonplace as private developers often want prime land for development. Amnesty International provides numerous examples of this from around the world. A short video summarizes a number of other videos they have compiled on this.

Some settlements don’t have official recognition. As a result, residents have been denied a range of essential services provided by the government to other residents … [such as] water, sanitation, electricity, garbage collection, health, education, access roads and transport (from Amnesty International’s report: Kenya: the unseen majority; Nairobi’s two million slum-dwellers , June 2009, p.7).

Kenya’s Kibera slum, Sub-Sharan Africa’s largest informal settlement, is an example of a massive settlement without official recognition which has been around for decades. The video clip shows that despite the hardships there is still a sense of vibrant humanity. Share The World’s Resources, an organization that produced the video, released the book Megaslumming which described this further, highlighting that despite the grinding reality of poverty, human nature can still prevail and people work together to help each other and are enterprising despite all the circumstances.

In developing countries, where some 1 in 3 people living in cities are living in slum areas, the urgency to address this has never been more.

With increasing migration to cities (almost half of humanity lives in urban areas), there is increasing pressures on providing sufficient resources in a sustainable way.

Furthermore, as cities grow in this way, addressing greenhouse emissions from urban areas can go a long way to helping combat climate change .

Some of the other findings the 2008/2009 UN Habitat reported included that

• Some 3 million people per week were added to cities of developing world.
• Some American cities are as unequal as African and Latin American cities. For example, New York was found to be the 9th most unequal in the world while Atlanta, New Orleans, Washington, and Miami had similar inequality levels to those of Nairobi, Kenya Abidjan and Ivory Coast.
• Race is one of the most important factors determining levels of inequality in the US and Canada. For example, The life expectancy of African-Americans in the US is about the same as that of people living in China and some states of India, despite the fact that the US is far richer than the other two countries.
• India was becoming more unequal as a direct result of economic liberalization and globalization.
• The most unequal cities were in South Africa and Namibia and Latin America.
• Beijing was now the most egalitarian city in the world, just ahead of cities such as Jakarta in Indonesia and Dire Dawa in Ethiopia.
• Europe was found to be generally more egalitarian than other continents. Denmark, Finland, the Netherlands and Slovenia were classed as the most equal countries while Greece, the UK and Spain were among the most unequal.

Conventional thinking on development issues is often characterized by many assumptions, clichés and rationalizations about the residents of slums. Challenging some of these core myths about slums can help focus on the structural causes of urban poverty that result in the rapid growth of informal settlements, as Adam Parsons from Share the World’s Resources organization notes.

Although the above focuses on cities, more generally, rural areas exhibit more poverty than urban areas which is briefly looked at next. In addition, the section further below on poverty in industrialized areas also suggests that inequality is unfortunately widespread.

Poverty and inequality in rural areas is also high, particularly in the developing world.

The International Fund for Agricultural Development (IFAD), an international financial institution and a specialized UN agency, released a major report on the state of rural poverty in the developing world in December 2010.

The Rural Poverty Report 2011 contains updated estimates by IFAD of the number of rural poor people living in the developing world, poverty rates in rural areas, and the percentage of poor people residing in rural areas.

The report also includes new information on how many people move in and out of poverty over time. It points to what it describes as emerging opportunities for rural growth and development and suggests how to help rural women and men move out of poverty and become part of the solution for the global food security challenges of the next several decades.

The report adds that despite an historic shift towards urbanization, poverty remains largely a rural problem, and a majority of the world’s poor will live in rural areas for many decades to come. In addition, of the 1.4 billion people living in extreme poverty [less than US$1.25/day] in 2005, approximately 1 billion — around 70 per cent — lived in rural areas. (p.47)

Changes over time are not the same in all regions, however.

As the IFAD chart shows,

• As a total average, yo% of those in extreme poverty live in rural areas
• East Asia has reduced the rural share of total poverty to just over 50 per cent
• Latin America and the Caribbean, and the Middle East and North Africa, the most urbanized regions, a majority of the poor now live in urban areas
• In South Asia, South East Asia and sub-Saharan Africa, by contrast, over three-quarters of the poor live in rural areas, and the proportion is barely declining, despite urbanization

But rural areas are not with poor only. In recent years, many have been lifted out of poverty:

As the IFAD chart shows, as a total average across developing nations, just under 35% of the total rural population of developing countries is classified as extremely poor, down from around 54% in 1988. The various regions have fared differently, however. For example,

• Rural poverty has declined more slowly in South Asia, where the incidence is still more than 45 per cent for extreme poverty and over 80 per cent for US$2/day poverty
• Likewise, sub-Saharan Africa’s rural poverty decline is also slow, where more than 60% of the rural population lives on less than US$1.25 a day, and almost 90% lives on less than US$2/day.

Even within these regions, the IFAD reports that some countries and sub-regions fared better than others.

IFAD also noted that the number of those living on less than $2 a day is also down, from around 80% of all rural populations to around 60% (but mostly due to massive rural poverty reduction in East Asia (mostly China) where today the incidence of rural poverty is around 15% for the US$1.25/day line and 35% for the US$2/day line. (p.48)

Despite successes in areas like Latin America when using the internationally comparable $1.25/day poverty line, the report also warns that the numbers there that can be classified in poverty would be higher if using their own national poverty lines. In other words, inequality is high even while absolute poverty is slowly being reduced.

In addition, in terms of raw numbers of people, South Asia and sub-Saharan Africa are where most rural poor live:

Although the graphs seem to show progress, the report warns of complacency as further efforts to reduce rural poverty will be complicated by

• Increasingly volatile food prices as seen in 2008
• The uncertainties and effects of climate change , and
• A range of natural resource constraints

IFAD also notes that women tend to do more work (for less pay) and are the primary care givers in virtually all rural societies, yet barely feature in recognition or policy.

IFAD also adds that The general implication of these findings is that achieving gender equality requires challenging social institutions, and that doing so is crucial to address interlocking deprivations which result in poverty – not only for women, but poverty more broadly. … women’s access to better paid, more secure jobs is not only beneficial to them and their families, but also to the growth of the wider economy. (p.63)

For more information, see this site’s section on women’s rights which goes into the above further.

A Canadian study in 1998 suggested that the wealthiest nations do not have the healthiest people ; instead, it is countries with the smallest economic gap between the rich and poor.

For many years, poverty has also been described as the number one health problem for many poor nations as they do not have the resources to meet the growing needs. Yet, it is not beyond humanity:

At the end of August, 2008, the World Health Organization’s Commission on the Social Determinants of Health presented a 3-year investigation into the social detriments to health in a report titled the Closing the gap in a generation: Health equity through action on the social determinants of health .

The report noted that health inequalities were to be found all around the world, not just the poorest countries:

The poorest of the poor, around the world, have the worst health. Those at the bottom of the distribution of global and national wealth, those marginalized and excluded within countries, and countries themselves disadvantaged by historical exploitation and persistent inequity in global institutions of power and policy-making present an urgent moral and practical focus for action. But focusing on those with the least, on the ‘gap’ between the poorest and the rest, is only a partial response. … In rich countries, low socioeconomic position means poor education, lack of amenities, unemployment and job insecurity, poor working conditions, and unsafe neighbourhoods, with their consequent impact on family life. These all apply to the socially disadvantaged in low-income countries in addition to the considerable burden of material deprivation and vulnerability to natural disasters. So these dimensions of social disadvantage – that the health of the worst off in high-income countries is, in a few dramatic cases, worse than average health in some lower-income countries … – are important for health.

Sir Michael Marmot, chair of the Commission, noted in an interview that most health problems are due to social, political and economic factors.

The key determinants of health of individuals and populations are the circumstances in which people are born, grow, live, work and age, he says. And those circumstances are affected by the social and economic environment. They are the cause premature of disease and suffering; that’s unnecessary. And that’s why we say a toxic combination of poor social policies, bad politics and unfair economics are causing health and disease on a grand scale. Marmot expands on this further in the video clip.

Even within a country such as the UK, then, the report finds that the average life-span can differ by some 28 years, depending on whether you are in the poorer or wealthier strata of society.

This is discussed in more detail on this web site on this page: Global Health Overview .

Various things can create inequality. Most common generalizations will be things like greed, power, money. But even in societies where governments are well-intentioned, policy choices and individual actions (or inactions) can all contribute to inequality.

In wealthier nations, the political left usually argue for addressing inequality as a matter of moral obligation or social justice, to help avoid worsening social cohesion and a weakening society.

The political right in the wealthier nations generally argue that in most cases, western nations have overcome the important challenge of inequality of opportunity, and so more emphasis and responsibility should be placed on the individual to help themselves get out of their predicament.

Both views have their merits; being lazy or trying to live off the system is as abhorrent as inequalities structured into the system by those with wealth, power and influence.

In poorer countries, those same dynamics may be present too, sometimes in much more extremes, but there are also additional factors that have a larger impact than they would on most wealthier countries, which is sometimes overlooked by political commentators in wealthy countries when talking about inequality in poorer countries.

For example, in some poorer countries, a combination of successive military governments (often supported or aided by the West) and/or corrupt leadership, as well as international economic policy have combined to create debt traps and wealth siphoning, affecting the poorer citizens the most (because the costs such as the debt gets socialized ).

Nigeria is one often-mentioned example, as Jubilee 2000 highlights where Western backed dictatorships have siphoned off much of the nation’s wealth in the past leaving the country under immense debt for later generations to suffer under. Indonesia is another example as part of this Noam Chomsky interview by The Nation magazine reveals. Latin America on the whole is another.

Latin America has the highest disparity rate in the world between the rich and the poor : Internal, regional and external geopolitics, various international economic factors and more, have all contributed to problems. For example, the foreign policy of the US in that region has often been criticized for failing to help tackle the various issues and only being involved to enhance US national interests and even interfering, affecting the course and direction of the nations in the region through overt and covert destabilization. This, combined with factors such as corruption, foreign debt, concentrated wealth and so on, has contributed to poverty there.

Much of the above was written around early 1999. Unfortunately, well into 2003, the World Bank reported that the Latin American rich-poor gap is widening . There has been progress in closing the gender gap in income, and girls and young women had overtaken their male counterparts in education. However, inequality is very high. For example:

• Income inequality in the region had worsened with the richest one tenth of the population earning 48% of its total income, while the poorest tenth earns only 1.6%
• Race has also been a factor where Indigenous and Afro-descended people are at considerable disadvantage with respect to whites, with the latter earning the highest wages in the region.

Into 2010, Inter Press Service (IPS) reports that 10 of the 15 most unequal countries in the world are in Latin America : Bolivia, followed by Haiti, Brazil, Ecuador, and Chile, which is tied in fifth place with Colombia, Guatemala, Honduras, Panama and Paraguay.

The UK and US are often two of the more dynamic nations, economically and opportunities to make a very successful life is well within the realms of possibility. Yet, these two tend to have the worst levels of inequality amongst industrialized nations. Such levels of inequality implies that it is overly simplistic to blame it all on each individual or solely on government policy and white-collar corruption.

While ideological debates will always continue on the causes of inequality, both the political left and right agree that social cohesion (social justice or family values, etc) is suffering, risking the very fabric of society if it gets out of control.

Andrew Simms, policy directory for the New Economics Foundation in U.K. (which spear-headed the Jubilee 2000 campaign to highlight the injustices of third world debt) makes an interesting suggestion in the British paper, The Guardian (August 6, 2003).

He suggests that as well as a minimum wage, for the sake of social cohesion there should perhaps be a maximum wage , too.

Amongst various things, Simms notes that tackling inequality from the other end is important because the economic case for high executive pay in terms of company performance doesn’t hold up, and because highly unequal societies have a habit of falling apart.

In addition:

Crime and unhappiness stalk unequal societies. In the UK the bottom 50% of the population now owns only 1% of the wealth: in 1976 they owned 12%. Our economic system’s incentive structure, instead of trickle-down , is causing a flood-up of resources from the poor to the rich. Inequality leads to instability, the last thing the country or world needs right now. Even the former hardline conservative head of the International Monetary Fund, Michel Camdessus, has come to the conclusion that the widening gaps between rich and poor within nations is morally outrageous, economically wasteful and potentially socially explosive . Above subsistence levels, what undermines our sense of well-being most is not our absolute income levels, but how big the gaps are between us and our peers. Allowing the super-rich to live apart from society is as damaging in its own way as the exclusion of the poorest.

It seems, however, that neoliberal economic ideology may lead many to think inequality is not important. This partial transcript of an interview with Britain’s then-Prime Minister, Tony Blair, by the BBC prior to the June 2001 elections, reveals an example of that where Blair appeared to evade the question of the importance of reducing inequality, and kept suggesting that he wants to improve the lot of the poor, regardless of the levels of inequality between rich and poor.

Britain’s BBC aired a documentary on March 17, 2004, titled IF . It looked into a scenario of what would happen in a few years if the growing inequality in the United Kingdom continued to widen. While the predictions of what would happen are always tough to make, the documentary noted some important issues that are already present, and that also parallel many parts of the world today.

In summary, the documentary noted the increasing alienation and exclusion of people in society where inequality was high, but if government tried to do something about it, they would face a powerful obstacle: the rich. The remainder of this subsection provides more details:

Gated communities , while providing an opportunity to develop otherwise derelict areas, also represents a sign of growing inequality, whereby those who can afford to do so live in areas where security is paid for and managed to ensure undesirables are kept out.

While individuals are making understandable decisions regarding their security, there is the additional effect of cutting off from the rest of society, leading to consequences such as:

• Resentment, fragmentation, and exclusion;
• A divided society (described as an apartheid of society);
• Opportunities;

These are times when the welfare state is failing people because it gives people a false sense of security and uses an element of coercion (payment of taxes to pay for the services). Yet, at the same time, the documentary noted, what is making this situation more complicated is that the super rich are taking advantage of globalization and all the loop holes it provides, such as off-shore tax havens. As a result, there is less the state is able to do, leading to further frustrations.

In the U.K., it was noted that inequality has been increasing to levels not seen since around the Second World War.

At the same time, in U.K. (as elsewhere) private security services are increasing, providing a quasi-policing role. This is in response to the increase in crime, an effect of inequality. But this has important implications. For example:

• Such services are good at protecting everything that is a commodity and has a price. This typically implies possessions of individuals.
• The wealthy, the documentary also noted, can afford more private security than the poor. When a fear of crime exists then it is understandable that people will want security services that can protect their property. Furthermore, one would not expect an individual concerned with their own well-being to appear to sacrifice that for the sake of society. The concerns for their immediate family, children naturally take precedence.
• Regrettably though, a downward spiral potentially emerges that seems hard to get out of, because of the increasing fragmentation and exclusion that this results it.

However, policing is meant to be more than protecting things of material value; the police are supposed to have social and human concerns for society as well, something a private security firm neither is mandated to have, nor is usually created for. Due to the different roles, the costs, structures and accountability are also different.

If crime is perceived to be increasing and the police are not seen as trusted, people can, and do take actions into their own hands. Wealthier people of course can afford to take more measures.

In theory then, one of the many things that makes up a functioning, stable and democratic society is an uncorrupted judicial system and law enforcement.

Addressing the root causes of inequality would therefore seem to be where the challenge lies. The political costs of inequality are recognized and accepted as being too high. The economic costs of fighting effects are also high. Citing some research, the BBC also noted that for each dollar spent on poverty causes, seven dollars was saved on consequences .

Unfortunately, governments are in a difficult situation, because they can try to address inequality, but they will anger the rich .

In May 2002, the BBC aired another documentary related to inequality, called The Experiment , where they showed in detail how inequality can turn good people to evil .

• The experiment involved a system of guards and prisoners.
• The prisoners eventually revolted against the initial inequality.
• However, some of the former prisoners themselves instituted what was becoming an almost fascist regime before the experiment was eventually stopped.
• Our democracies are more fragile than we realize;
• In addition, any power vacuums, which inequality can create and exacerbate, can seriously threaten to undermine democracy .

Inequality is also characterized by a concentration of wealth, which means a concentration of political power. Historically, one of the main reasons for continued poverty has been in order to maintain this power.

In the developing world, there is a pattern of inequality caused by the powerful subjugating the poor and keeping them dependent. Outside influence is often a large factor and access to trade and resources is the usual cause. It is often asked why the people of these countries do not stand up for themselves. In most cases when they do, they face incredible and often violent oppression from their ruling elites and from outsiders who see their national interests threatened.

Consider the following from the United Nations:

Everyone has the right to work, to just and favourable conditions of work and to protection for himself and his family [and] an existence worthy of human dignity … Everyone has the right to a standard of living adequate for the health and well being of himself and his family, including food, clothing, housing and medical care.

And contrast that with the following around the same time, from a key superpower that helped create the United Nations. It is from George Kennan, head of the US State Department planning staff until 1950, and his comments on US relations with Far East:

we have about 50% of the world’s wealth, but only 6.3% of its population.…In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity.…To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives.…We should cease to talk about vague and… unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better. … We should recognize that our influence in the Far Eastern area in the coming period is going to be primarily military and economic. We should make a careful study to see what parts of the Pacific and Far Eastern world are absolutely vital to our security, and we should concentrate our policy on seeing to it that those areas remain in hands which we can control or rely on.

While it is recognized that strong institutions, a functioning and non-corrupt democracy, an impartial media, equitable distribution of land and a well structured judicial system (and other such factors), etc. all help in realizing a successful nation and society, a lack of any of these things can lead to a marginalization of a sector of people. Often, it can be a very large sector.

For example, those likely to lose out in such an equalizing effect are the rich, elite power holders.

As a result of their ability to own and/or influence one of these above-mentioned things, they affect the lives of millions. This is a pattern seen throughout history. Take for example the medieval days of Europe where the wealthy of the time controlled land via a feudal ruling system and hence impoverished the common people intentionally.

• The rulers (Kings etc), would proclaim their Divine Right to rule over their subjects.
• They had an army of Lords and Bishops to advise on policies that benefited these groups (religion was used—and still is—to control and influence people, while Lords and Knights were an extension to the ruling family that would carry out the wishes.)
• They would heavily tax the people of their land.
• Not allowing the peasants to own the land upon which they lived meant that they would be stuck in poverty and dependency.
• It was only at that point did the revolutions such as the French Revolution take hold (because now the nobility had their wealth affected and were able to influence the peasants to fight for their cause.)
• While this helped bring more rights, once the people won, there were concessions made that allowed the elite to retain their power, but to share it a bit more.

Trading superiority was maintained by raiding and plundering areas deemed as a threat. Summarizing from the works of the Institute for Economic Democracy :

• The old European city states, which were centers of wealth, would control their countryside as the source of their resources and production, and hence, the source of their wealth. If the countryside became more efficient and produced better, or threatened to trade with other neighboring cities, this would be seen as a threat to the wealth, power and influence of the city. These peripheries would therefore be raided and their means of production would be destroyed.
• The cities would fight over each other for similar reasons.
• For continual support, those rulers would proclaim various reasons to their people, of maintaining security and so on (not unlike what we hear today about national security). Even some laws were established that basically allow these practices.
• A strong military was therefore necessary (just as it is today) to ensure those trade advantages were unfairly maintained.
• Those European city states evolved into nation states and imperial powers, and the countryside expanded to include today’s third world , which was much of the rest of the world. The effects of colonialism and imperialism are still felt today.

The discovery of the Americas, expansion of trade routes etc brought much wealth to these centers of empire which helped fuel the industrial revolution, which required even more resources and wealth to be appropriated, to continue this growth. Mass luxury consumption in Europe expanded as well as a result of the increased production from the industrial revolution.

But this had a further negative impact on the colonized nations, the country side , or the resource-providers. For example, to keep profits up and costs down, they used slavery where they could, sometimes transferring people across continents, introducing others when indigenous populations had either been wiped out, decimated, or proved too resistant in some way.

Europeans also carved out artificial borders to reflect their territorial acquisitions, sometimes bringing different groups of people into the same borders that had never been forced to live together in such short times. (Some poorer countries today still suffer the effects of this.)

As with the previous wars throughout Europe’s rise, World War I and II were also battles amongst the various European empires who struggled over each other to control more of the world’s resources and who would decide the rules of unequal trade .

Except for religious conflicts and the petty wars of feudal lords, wars are primarily fought over resources and trade. President Woodrow Wilson recognized that this was the cause of World War I: Is there any man, is there any woman, let me say any child here that does not know that the seed of war in the modern world is industrial and commercial rivalry?

Plundering the countryside to maintain dominance and control of the wealth-producing process has been an age-old process.

These mercantilist processes continue today . Those policies of plunder by raid have continued, but include a more sophisticated plunder by trade :

The powerful and cunning had learned to plunder by trade centuries ago and societies ever since have been caught in the trap of those unequal trades. Once unequal trades were in place, restructuring to equal trade would mean the severing of arteries of commerce which provide the higher standard of living for the dominant society and collapse of those living standards would almost certainly trigger open revolt. The world is trapped in that pattern of unequal trades yet today.

The geopolitical events of the post World War II era have been crucial for their impacts on poverty and most other issues. J.W. Smith summarizes this:

Virtually the entire colonial world was breaking free, its resources would be turned to the care of its own people, and those resources could no longer be siphoned to the old imperial-centers-of-capital for a fraction of their value. … If India and the rest of the world’s former colonies continued to take the rhetoric of democracy seriously and form the nonaligned bloc as they were planning, over 80 percent of the world’s population would be independent or on the other side of the ideological battle. And, if Japan, Germany, Italy, and France could not be held (it was far from sure they could be), that would leave only the United States, Britain, Canada, and Australia, about 10 percent of the world’s population, still under the old belief system, and even there the ideological hold would be tenuous at best. After all, if there were no countryside under the firm control of an imperial center, the entire neo-liberal/neo-mercantilist belief system will have disappeared. What Western nations were observing, of course, was the same potential loss of the resources and markets of their countryside as the cities of Europe had experienced centuries earlier. National security and security interests, which citizens were coached (propagandized) to believe meant fear of a military attack, really meant maintaining access to the weak, impoverished world’s valuable resources. The domestic prosperity worried about was only their own and the constantly expanding trade were unequal trades maintaining the prosperity of the developed world and the impoverishment of the undeveloped world as the imperial-centers-of-capital siphoned the natural wealth of their countryside to themselves. … Those crucial natural resources are in the Third World and developed world capital could never compete if those people had their own industrial capital and processed their own resources into consumer products. With their own industrial capital, and assuming political and economic freedom as opposed to world neo-liberal/neo-mercantilist law dictated by military power, they could demand full value for their natural resources while simultaneously underselling the current developed world on manufactured product markets. The managers-of-state had to avert that crisis. The world’s break for freedom must be contained.

While European nations are now more cooperative amongst themselves (in comparison to the horrors of World War II) and the U.S. had long taken the lead in the international arena, for the rest of the world, international trade arrangements and various economic policies still lead to the same result. Prosperity for a few has increased, as has poverty for the majority.

Today’s corporate globalization , is an example where the wealthier companies and nations are able to determine the rules, shape the international institutions and influence the communication mechanisms that disseminate information to people.

In this backdrop, how do developing nations contend with poverty?

• During the Post World War II period, during the Cold War, poorer country governments often found that if they tried to improve the situation for their people, they could have been perceived as a threat or worse still going communist. They may have faced external pressure, external meddling in internal affairs or even military intervention by the powerful nations.
• The powerful nations would of course claim this was necessary for something like world stability, national interest, or to save the other country from themselves, but it would often be to do with protecting their national interests, such as a secure and constant supply of cheap resources or some other reason related ultimately to maintaining influence and power.
• Dictators and other corrupt rulers have often been placed/supported in power by the wealthier nations to help fulfill those national interests in a similar way the old rulers of Europe used the Lords and Knights to control the peripheries and direct resources to the centers of capital. (Although, now, increasingly, democracies are supported, but ones where the economic choices are so limited, that the democracy provides a similar environment that a dictatorship did, for foreign investors, but without the overt violence and oppression.)
• This means that it is hard to break out from poverty, or to reduce dependency from the US/IMF/World Bank etc.

Structural Adjustment (SAP), as described in a previous section on this web site, is an example of that dependency. Neoliberal economic ideology has been almost blindly prescribed to poor countries to open up their economies.

The idea is that opening markets for foreign investment will also help improve exports and contribute to economic growth. Cutting back on social spending (e.g. health and education) which are seen as inefficient will also help pay back loans and debts.

But what ends up happening is the poorer nations lose their space to develop their own policies and local businesses end up competing with well-established multinationals, sometimes themselves subsidized (hinting a more mercantilist economic policy for the rich, even though free market capitalism is the claim and the prescription for others).

Hence, many back the economic neoliberal policies without realizing the background to it. It is another example that while international trade and globalization is what probably most would like to see, the reality of it is that it is not matching the rhetoric that is broadcast.

J.W. Smith has researched this in depth and the following offers a relevant summary:

The Third World remains poor because the powerful strive to dominate every choke-point of commerce. One key choke-point is political control through the co-respective support of local elites. Where loyalty is lacking, money will be spent to purchase it. If a government cannot be bought or otherwise controlled, corrupt groups will be financed and armed to overthrow that government and, in extreme cases, another country will be financed to attack and defeat it.… The pattern has been well established repeatedly throughout history and throughout the world, as noted by the well-known philosopher Bertrand Russell, An enormous proportion of the income of nations and individuals, nowadays, is blood money: payment exacted by the threat of death. Therefore the most prudent nation is the nation which is in the best position to levy blackmail.…Modern nations are highwaymen, saying to each other your money or your life, and generally taking both.

(To find out more about the political dimensions of the economy of the world and to see the detailed links between history (how it is both told and repeated), politics that are always at play and the effects on the economy the world over, visit the Institute for Economic Democracy web site. It provides much more in-depth research into these backgrounds and in far more detail than what I have summarized above.)

With this in mind, why would so many people not oppose such things? There are many reasons, including:

The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum—even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate.

• Those that have opposed such things in the past may have been persecuted in some way. In some societies those who try to say something may just face ridicule due to the embedded belief systems which are being questioned, while in other societies, people may even face violent oppositions.

[W]e should be familiar with the sincerity with which people will protect the economic territory that provides them their livelihood and wealth. Besides the necessity of a job or other source of income for survival, people need to feel that they are good and useful to society. Few even admit, even to themselves, that their hard work may not be fully productive. This emotional shield requires most people to say with equal sincerity that those on welfare are lazy, ignorant, and nonfunctional. Those above the poverty level vigorously insist that they are honest and productive and fulfill a social need. It is important to their emotional well-being that they believe this. They dare not acknowledge that their segment of the economy may have 30 to 70 percent more workers than necessary or that the displaced should have a relatively equal share of jobs and income. This would expose their redundancy and, under current social rules, undermine their moral claim to their share. Such an admission could lead to the loss of their economic niche in society. They would then have to find another territory within the economy or drop into poverty themselves.

J.W. Smith, quoted above, also points out (and details in his work) how we have moved from plunder by raid to plunder by trade in recent centuries. The complexities of some of today’s economics and trading systems also make it harder to address root causes of poverty:

Although in [the] early years the power brokers knew they were destroying others' tools of production (industrial capital) in the ongoing battle for economic territory, trade has now become so complex that few of today’s powerful are aware of the waste and destruction created by the continuation of this neo-mercantilist struggle for markets. Instead, they feel that it is they who are responsible for the world’s improving standards of living and that they are defending not only their rights but everybody’s rights. This illusion is possible because in the battle to monopolize society’s productive tools and the wealth they produce, industrial capital has become so productive that—even as capital, resources, and labor are indiscriminately consumed—living standards in the over-capitalized nations have continued to improve. And societies are so accustomed to long struggles for improved living standards that to think it could be done much faster seems irrational.

And when considering how today’s global economic model promotes the liberalization of capital more and more, the effects of rapid flows of capital and other impacts of over-liberalization is borne largely by the poorer members of society:

A French humorist once wrote, When it’s money you’re after, look for it where it is most abundant, among the poor. Governments now do this more than ever because the poor are rooted, stationary, slow ; whereas the big money is nomadic and travels at the speed of bytes. Stationary money (of local businesses, professionals, wage and salary earners) will be taxed to the limit for the simple reason that it can be got at.

The World Bank is a major international institution involved in poverty and development. It has the capacity to lend a lot of money and expertise to developing countries and advise on development matters.

The World Bank produces an annual report, called the World Development Report. The Bank regards this as its flagship report. Most mainstream economists use this report in some way or form, and it is one of the few reports on development that the US mainstream media reports on (because it usually shows the US, and its policies that it prescribes to the rest of the world, in a favorable light.)

The way the 2000 report was released highlighted another problem with the World Bank, and how it doesn’t like to accept criticism on the current forms of globalization and neoliberalism. For the 2000 report, Ravi Kanbur, a professor from Cornell University had been asked to lead up the report team.

Kanbur won respect from NGO circles as he tried to be inclusive and take in a wide range of views, something the Bank has been criticized for not doing (which is a problem in itself!). However, as the report was to be published, he resigned because he was unreasonably pressured by the Bank to tone down sections on globalization, which, amongst other things called for developing nations to accept market neoliberalism cautiously.

The World Bank was apparently influenced itself by the US Treasury on this—this is not new though; critics have long pointed out that the Bank is very much influenced by the US, thus affecting the chance of real progress being made on poverty issues around the world.

The following quotes collected from the Bretton Woods Project, reveal some interesting insights:

The Washington Consensus has emerged from the Asia Crisis with its faith in free markets only slightly shaken. Poverty eradication is now the menu, but the main dish is still growth and market liberalisation, with social safety nets added as a side dish, and social capital scattered over it as a relish. The overall implication of the resignation is fairly clear. The US does not want the World Bank to stray too far from its agenda of economic growth and market liberalisation. Ravi Kanbur’s draft has raised a few too many doubts about this agenda, and strayed too much towards politics.

To keep the Bank afloat Wolfensohn has to steer between two major constituencies. The first are the critics, the second is the US Treasury. You don’t need to be a World Bank economist to do the cost benefit analysis. To save the Bank, and his own reputation, it is essential that the Bank’s policies and public pronouncements do not err too far from its main shareholder and political protector, the US Treasury.

The World Bank has often come under criticism for its development projects not actually helping the societies that they claimed they will. One such example is the numerous dam projects that have seen lives devastated, where millions have been displaced and people have not seen the benefits promised, while at the same time, the environment has degraded and crucial arable land has been flooded. This is discussed further on this site’s hunger and poverty causes section.

Another example is the devastating Structural Adjustment Policies pressured upon poor countries by the First World, The World Bank and the IMF. These have had devastating consequences for much of the third world, though benefiting the First World.

Another example involves a recent Chad-Cameroon oil pipeline project , which started construction in 2000. The World Bank had also stressed commitments to ensure policies were observed that would protect society and the environment, while helping millions of poor in Chad out of extreme poverty (Chad is the fifth poorest country in the world) and also providing land-locked Cameroon with much needed revenue.

The World Bank’s actual monetary investment amount was just four percent of the cost. However their participation and stated commitment to poverty-combating development gave political backing that allowed multinational oil companies (who were the main investors) to raise sufficient capital on the international capital markets, which they would not have been able to otherwise do.

The World Bank had therefore highlighted this project as a prototype for the extractive industry, designed to carry oil wealth not to a few but to the mass of the poor.

AfricaFiles is an organization about African issues from the perspective of human rights, economic justice, and African perspective and alternative analysis. Given the World Bank’s claims and presenting this project as a flagship of sorts, AfricaFiles issued a report looking to see how the World Bank’s claims held up.

They concluded that

• Oil corporations cannot be transformed into development agencies even with the best intentions and monitoring mechanisms referring to the sidelining of time-intensive parts of the project such as capacity building and taking social and environmental issues into consideration.
• As a result, global levers of development outcomes like the World Bank cannot exercise sufficient clout on oil multinationals' penchant for profits
• The World Bank is incapable of respecting its own weakening safeguard policies, which are premised on controlling damage rather than avoiding harm. This is particularly significant as Africa banks on the increasing trend in Foreign Direct Investments (FDIs).
• The embryonic neo-liberal governance structures in Africa are incapable of forcing FDIs, which are principally attracted by ground mineral resources, to respect ecological and social principles. This cannot be over-stressed, especially as the World Bank prepares to engage in what it calls high risk/high reward projects in developing countries.
• The flawed contention of the World Bank is you cannot eat omelettes without breaking some eggs. As this paper has demonstrated, the eggs most often broken are those of the poor who are left with no alternative livelihood. The paper has also noted the high level of corruption, implying that those who would eat the omelette so to speak, would be the wealthy elite and multinationals.
• Public Private Partnership [PPP], the buzz paradigm of sustainable development, is fundamentally incapable of addressing the unequal power relation between fattening multinationals, weakening states and the World Bank, in this era of globalisation.

AfricaFiles also, interestingly, suggested the World Bank use its precious resources to support more renewable energy sources development rather than oil, which has had so much political, economic and environmental problems associated with it. This was also a recommendation from a report commissioned by the World Bank itself, which has not been followed.

In mid-2004, the committee set up to oversee transparency in the oil revenues in Chad has protested about the lack of resources from both the government and the oil company involved , and that people in Chad were becoming disillusioned at the project.

In September 2005, the human rights organization, Amnesty International criticized the project investment agreements for undermining human rights , noting that, The investment agreements governing the project risk seriously undermining the ability and willingness of Chad and Cameroon to protect their citizens’ human rights, making the oil companies de facto unaccountable in the pipeline zone. Nearby fisherman and farmers have also been denied access to water and land, and that there is a prevailing climate of fear and intimidation around the pipeline, some of whose critics have already been arrested and intimidated.

In mid-January, 2006, the BBC reports that the World Bank shut down the Chad oil account which was to keep 10% of the oil revenue for future generations of people in Chad. The Chad government argued it needed to fight against poverty now and had a right to that revenue and signed a law allowing access to that account early. Earlier, the World Bank had suspended some loans, too. Some will raise concern of possible intention for corrupt practices by the Chad government, while others will see the World Bank’s influence at play here, preventing another African country to determine its own policies and be accountable to its own people.

The World Bank also provides the main source of poverty figures, such as those presented further above. The $1 dollar a day poverty line (now upgraded to $1.25 dollars a day using newer data and updated techniques) has also fallen under criticism in the past.

For example, during the long period the $1 dollar a day measure was used the World Bank was criticized for almost arbitrarily coming up with a definition of a poverty line to mean one dollar per day .

In addition, as also stated in the previous link, in the United States for example, the poverty threshold for a family of four has been estimated to be around eleven dollars per day. The $1 a day (now $1.25) definition then misses out much of humanity. Indeed, as the chart earlier showed, the number of people living on under $10 dollars a day is estimated to be just under 80% of humanity (95% of developing countries).

To be fair, the World Bank did explain why they did not use a $10 dollar a day poverty line . They felt that Learning that (possibly) 95% or more of the [developing country] population is poor by such a standard is unlikely to have much relevance, given that US standards of living are not within the foreseeable reach of most people in a typical developing country.

It does seem sadly true that this level is sadly not attainable in the near future for so many people. However, it serves as a useful figure to remind us how divided the world may indeed be (although, as also mentioned earlier, numbers alone do not capture all the issues; as also mentioned earlier, a number of studies show that some of the poorest in rich countries can be regarded as worse off than some in developing countries, depending on what you measure such as well-being, health, social cohesion, etc.) This can be seen more vividly in that chart also shown earlier:

Another critique of the $1 a day figure came from Columbia University, called How not to count the poor .

The report describes 3 main errors as being:

• An ill-defined poverty line;
• A misleading and inaccurate measure of purchasing power equivalence; and
• Incorrect extrapolation of limited data giving the false impression of precision while masking the high probably error of the estimates.

These errors, they feared, would lead to a large understatement of the extent of global income poverty and to an incorrect inference that it has declined. (Emphasis added). At the same time, it allowed the World Bank to insist that the world is indeed on the right track in terms of poverty reduction strategy, attributing this success to the design and implementation of good or better policies .

Since that report, the World Bank has indeed revised the poverty line as explained earlier and they noted more people were in poverty than previously realized. The links provided earlier from the World Bank do provide a better explanation of why their poverty lines were chosen as they were. And while the data this time significantly includes China and India for the first times, they also acknowledge various challenges with collecting the data. However, while they have also given their reason for not using a $10 a day poverty line (because most poor people are unlikely to reach that level in the foreseeable future), we must still wonder if poverty, and its effects, are worse than the figures reveal.

As an aside, Morgan Spurlock, the Oscar nominee for his documentary Super Size Me where he went 30 days on a diet of burgers to see what the effects would be, produced another documentary where he tried to live on the minimum wage of $5.15 per hour for 30 days . At times he was earning $50 to $70 a day and yet the tremendous hardships he faced was incredible (including a ludicrous $40 for a bandage in a hospital, and some $500 for just being seen to).

As mentioned earlier, poverty in industrialized nations is also an important issue. While many poor in wealthy countries may not be in absolute poverty as the many poor people in developing countries, the relative poverty and high inequality in many wealthy nations creates significant issues.

The gap between rich and poor has grown in more than three-quarters of rich countries since the mid-1980s, according to a study of income inequality and poverty by the Organization for Economic and Cooperative Development (OECD) released in October 2008.

In addition, the study finds that the economic growth of recent decades has benefited the rich more than the poor.

However, amongst those 30 countries, results are mixed. The study finds, for example, that the past five years saw growing poverty and inequality in two-thirds of OECD countries. Canada, Germany, Norway and the United States are the most affected. The remaining third—particularly Greece, Mexico and the United Kingdom—have seen a shrinking gap between rich and poor since 2000.

As summarized by an OECD briefing , the income of the richest 10% of people is, on average across OECD countries, nearly nine times that of the poorest 10%.

The average hides large variations. For example the top 3 countries with the highest income gaps are:

• Mexico, where the richest have incomes of more than 25 times those of the poorest
• Turkey, where the ratio is 17 to 1
• USA, where the ratio is 16 to 1.

Portugal and Poland also have large gaps, making it the top 5, but their gaps are not as large as those first three. (For many years, the US was regarded as having the largest gap between rich and poor of any industrialized nations, but the group of industrialized nations has slightly grown since to include Mexico and Turkey—also the two poorest OECD countries—amongst others.)

In Nordic countries, however, such as Denmark, Sweden and Finland, the gap is much smaller. The incomes of the richest 10% average around five times those of the poorest 10%.

Although the elderly are more likely to be poor, the risk of them falling into poverty has reduced over the last two decades such that people aged 66-75 are now no more likely to be poor as the population as a whole.

Worryingly, however, children and young adults have poverty rates that are now around 25% higher than the population average, while they were below or close to that average 20 years ago.

The OECD report noted for example UK’s shrinking gap between rich and poor. Back in 2000, the UK was the worst place in Europe to be growing up if you were poor , as more children were likely to be born in to poverty there, compared to elsewhere in the EU.

Despite a period of boom, in April 2000, the UK National Office of Statistics found that disparities between rich and poor continued to grow in UK .

In April 2008, the BBC noted that after 30 years of unprecedented economic growth, the British are richer and healthier — but no happier than in 1973.

As well as growing inequality and other issues, the BBC noted that the UK figures follow trends from around the world that show that happiness and satisfaction do not correlate with average income once countries reach middle-income levels. In addition, one in six UK adults reported that they suffered from a variety of mental health problems in the latest survey, of which the largest category was mild anxiety and depression.

As Britain’s wealth generally increased, improvements in health were also accompanied by unhealthy luxury consumption including excessive alcohol consumption and excessive unhealthy eating creating a rise in alcohol related deaths and in obesity.

Andrew Simms, policy director of the New Economics Foundation in an article mentioned further above about inequality notes that

Crime and unhappiness stalk unequal societies. In the UK the bottom 50% of the population now owns only 1% of the wealth: in 1976 they owned 12%. Our economic system’s incentive structure, instead of trickle-down , is causing a flood-up of resources from the poor to the rich. Inequality leads to instability, the last thing the country or world needs right now. Even the former hardline conservative head of the International Monetary Fund, Michel Camdessus, has come to the conclusion that the widening gaps between rich and poor within nations is morally outrageous, economically wasteful and potentially socially explosive .

However, although there has been some improvement, there is a long way to go. A UNICEF report in February 2007 found that UK is failing its children as it comes bottom of all industrialized nations in terms of child well being. UK child poverty has doubled since 1979, for example.

As another example, it may be surprising for some readers to learn that the United States, although the wealthiest nation on Earth, has often had one of the widest gaps between rich and poor of any industrialized nation .

United For a Fair Economy reported that for 1998 almost 70% of the wealth was in the hand of the top 10% . In another report, they mentioned that the gap had widened in recent decades . In 1989, the United States had 66 billionaires and 31.5 million people living below the official poverty line. A decade later, the United States has 268 billionaires and 34.5 million people living below the poverty line-about $13,000 for a three-person family.

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%.

Inter Press Service also summarizes an updated report by the US Census Bureau that 1 in 7 people in the US are in poverty . In 2009, 43.6 million people — 14.6 percent of the population - were living in poverty in the U.S., up from 13.2 percent of the population in 2008. The United States currently has the highest number of people in poverty it has ever had since the government began counting in 1959, although the percentage of people this represents is lower than it was then (due to the increased population size since then).

As with Britain, even during the booming economy in the late 1990s and early 2000, there was an increasing gap between the rich and poor. Into 2002, fighting poverty did not appear to have been a major election campaign issue (nor was it in previous election campaigns).

Then chairman of the Federal Reserve, Allan Greenspan, revealed concerns in mid-2005 that the increasing and widening income gap might eventually threaten the stability of democratic capitalism itself in the US .

While health and education are key to any economy or nation to grow and be strong, both of these suffer issues of access, equality and pressure to cut back (including elsewhere around the world as discussed in the structural adjustment part of this site). For example,

• As a summary of a report titled Economic Apartheid in America mentions, that the United States is the only industrialised nation that views health care as a privilege, not a basic human right. . (Unfortunately the report itself not available on the Internet, but is produced by United for a Fair Economy where you can see many extracts and similar reports.)
• In addition, as good education is linked to a strong economy, Business Week reports ( February 14, 2002 ) on a study that analyses OECD data from 1994 to 1998, and summarizes that the literacy of American adults ranks 10th out of 17 industrialized countries. In addition, the issue of inequality was highlighted: More troubling, the U.S. has the largest gap between highly and poorly educated adults, with immigrants and minorities making up the largest chunk of those at the bottom. While Business Week concentrates on the U.S. they also point out that Despite the mediocre U.S. ranking, it still beat out most of its major trading partners except Germany, including France, Britain, and Italy. (Japan didn’t participate [in the study].)

The above-mentioned UNICEF report on child health found that as well as the UK being ranked bottom of all rich countries, the US ranked second to last. The report suggests that absolute wealth isn’t necessarily a guarantor of poverty alleviation or a measure for indicators such as child well-being, and factors such as inequality are also important.

And it isn’t in just these two industrialized nations that these problems persist. A Guardian news report, for example, shows that certain types of poverty in various European cities can be regarded as worse than in some other parts of the world which one would not normally think would compare with Europe, such as India.

This section has now moved into its own page, called Corruption .

Author and Page Information

• Created: Monday, July 20, 1998
• Last updated: Saturday, November 12, 2011

Document revision history

Alternatives for broken links

Sometimes links to other sites may break beyond my control. Where possible, alternative links are provided to backups or reposted versions here.

Actual link:

• Shaohua Chen and Martin Ravallion, 'The developing world is poorer than we thought, but no less successful in the fight against poverty', World Bank, August 2008 http://go.worldbank.org/5V41Z1WRL0

Alternatives:

• http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64166093&entityID=000158349_20080826113239
• Actual PDF-formatted report http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2008/08/26/000158349_20080826113239/Rendered/PDF/WPS4703.pdf
• http://go.worldbank.org/5V41Z1WRL0
• http://go.worldbank.org/3KL75ZFJ60
• http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64216926&entityID=000158349_20080902095754
• Actual PDF formatted report http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2008/09/02/000158349_20080902095754/Rendered/PDF/wps4620.pdf
• 'For richer, for fairer. Poverty reduction and income distribution', ID21 Insights Issue #31, September 1999 http://www.id21.org/insights/insights31/index.html

Alternative:

• http://www.id21.org/insights/insights31/insights-iss31-art00.html
• http://www.observer.co.uk/comment/story/0,6903,706484,00.html
• Bernie Sanders U.S. Congressman for Vermont, 'Who’s Losing?', undated http://bernie.house.gov/economy/today.asp
• 'Widening Gap Between Rich and Poor', China’s Report on US Human Rights Record in 2000, reposted at University of Dayton, School of Law http://academic.udayton.edu/race/06hrights/GeoRegions/NorthAmerica/china03.htm
• Amanda Bransford, 'One in Seven U.S. Citizens Sinks into Poverty', Inter Press Service, September 16, 2010 http://www.ipsnews.net/news.asp?idnews=52867
• https://www.globalissues.org/news/2010/09/16/6974
• http://www.cbo.gov/ftpdocs/124xx/doc12485/10-25-HouseholdIncome.pdf
• http://www.cbo.gov/doc.cfm?index=12485
• Jim Lobe, 'New Inequality Data Likely to Boost “Occupy” Movement', Inter Press Service, October 26, 2011 http://www.ipsnews.net/news.asp?idnews=105618
• https://www.globalissues.org/news/2011/10/26/11671
• http://www.protectthehuman.com/videos/world-habitat-day-stop-forced-evictions-in-africa-2
• https://www.amnesty.org/en/latest/news/2009/10/dia-mundial-habitat-gobiernos-africa-fin-desalojos-forzosos-20091005/
• Adam Parsons, 'The Seven Myths of ‘Slums’', Share The World’s Resources, December 9, 2010 http://www.stwr.org/health-education-shelter/the-seven-myths-of-slums.html
• The full report in PDF format http://www.stwr.org/downloads/pdfs/7_myths_report.pdf
• Coletta Youngers, 'U.S. Policy in Latin American and the Caribbean', Foreign Policy In Focus, Volume 3, Number 7, March 9, 1999 http://www.foreignpolicy-infocus.org/progresp/volume3/v3n07_body.html#policy
• The first link is a summary version of this one called 'U.S. Policy in Latin America; Problems, Opportunities, Recommendation' from the Interhemispheric Resource Center, Bulletin 53, March 1999. http://www.irc-online.org/content/bulletin/bull53/index_body.html
• Daniela Estrada, 'Inequality, Chile’s Bicentennial Challenge', Inter Press Service, September 17, 2010 http://www.ipsnews.net/news.asp?idnews=52884
• https://www.globalissues.org/news/2010/09/17/6991
• 'Ravi Kanbur’s resignation', Bretton Woods Project, June 14, 2000 http://www.brettonwoodsproject.org/action/wdr/kanbur.html
• http://web.archive.org/web/20021216215759/http://www.brettonwoodsproject.org/action/wdr/kanbur.html
• http://www.globalpolicy.org/socecon/bwi-wto/critics/2000/kanbur2.htm
• Some additional comments on the incident http://www.brettonwoodsproject.org/art.shtml?x=15489
• 'Chad-Cameroon pipeline: New report accuses oil companies and governments of secretly contracting out of human rights', Amnesty International, September 7, 2005, News Service No: 239, AI Index: POL 30/028/2005 http://web.amnesty.org/library/Index/ENGPOL300282005?open&of=ENG-TCD
• PDF-formatted actual report from Amnesty, 'Contracting out of human rights: The Chad-Cameroon pipeline project.' http://web.amnesty.org/library/pdf/POL340122005ENGLISH/$File/POL3401205.pdf
• BBC report: 'Rights fear over giant oil scheme' http://news.bbc.co.uk/1/hi/uk/4219804.stm
• Martin Ravallion, Shaohua Chen and Prem Sangraula, 'Dollar a Day Revisited', World Bank, May 2008 http://go.worldbank.org/3KL75ZFJ60
• Sanjay G. Reddy and Thomas W. Pogge, 'How not to count the poor', Columbia University, June 14, 2002 http://www.columbia.edu/~sr793/count.pdf
• Not of the report from the Bretton Woods Project http://www.brettonwoodsproject.org/art-16224
• Institute of Social Analysis, an organization set up by Colombia University http://www.socialanalysis.org
• 'Child Poverty in Perspective: An Overview of Child Well-being in Rich Countries', UNICEF, February 2007 http://www.unicef-icdc.org/presscentre/presskit/reportcard7/rc7_eng.pdf
• BBC’s copy of the report http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/13_02_07_nn_unicef.pdf
• BBC summary of the report http://news.bbc.co.uk/1/hi/uk/6359363.stm

Poverty in the World

How it works

To start with, as you can see the Global issue that I chose is poverty. One main cause of poverty that is found is warfare. when a war is caused the country who loses has many people who had lost their homes properties and valuable stuff. Poverty now is on a great level where people even live in garbage dunks, some don’t even have a home, people eat from garbage and others get sick by what they eat. Leading to death.

Likewise, Other people are not only in streets but also in little towns like the town where I used to live there were lots of homeless people who could not even look in the garbage for something to eat because people would not let them. Some of them were transported to another city or give them a new opportunity to start a new life, some of them went to jail and others died because of hunger.

This topic is important to me because I had experience of it, I experienced the poverty not the extreme one but I was in one poverty level I’m not sure which one but my family is in an extreme poverty, that’s why I chose this topic other than Climate change or religious conflicts. Poverty is not just being poor, poverty is in what we live in, what we drink, eat, wear, and in what ambient the person lives in. In my opinion poverty is the greatest Global Issue that is standing right now.

Later on, Oxfam is the organization who is helping to prevent poverty. Oxfam started in 1942, United Kingdom. Winnie Bynanyima has been the executive director since 2013. Oxfam is important to this issue of preventing poverty because it is one of the greatest organizations who is helping the poor. Although, Oxfam had some problems like other organization also debates and because of it they failed to report child abuse which was a big problem because they did not did what they promised.

Your donation will be used in general support of Oxfam America’s efforts around the world. Oxfam America is highly rated by Charity Navigator, the country’s leading independent charity evaluator. Oxfam America meets the 20 Standards for Charity Accountability of the BBB Wise Giving Alliance. Furthermore, today Oxfam works to end injustice of poverty, (that’s how they call it). Their plan is to end the roots of poverty and create lasting solutions. Also, the three main solutions that they have are:

• Help with extreme inequality and poverty
• Climate change

These plans or solutions are what the world is asking for not too much money or power but a bit of effort, a bit of heart, some people who looks for their partner, someone who shares what the man from above has given them and being a good Samaritan. This aint about religion but Oxfam is a good organization who actually helps prevent poverty. I think that Oxfam is doing a really good job because it doesn’t just focus on poverty but also in other stuff. Other Global Issues.

More than 3 billion people live on less than $2.50 a day and an estimated 1.3 billion people live in extreme poverty, making do with $1.25 or less daily. Can you imagine what it’s like to not have enough food to eat and go to bed hungry at night? Poverty is still a big problem in the world today, as you can see from the numbers. This is in spite of the progress that you see around you. The good news is that in 2010, only 18% of the world’s population was living way below the poverty line as compared to 36% in 1990. It’s a small victory, but the progress is slow. The World Bank aims to reduce global poverty to 9% by 2020 and to 3% by 2030. They plan to do this by focusing more on promoting income growth for the bottom 40% of the population and boosting shared prosperity. It’s a herculean task.

Having said that, I would bring awareness by starting a food drive. Social media would also work because many people now days even old people spend a lot of time in social media starting from the simplest one to the most used social media app, like starting from Facebook to Twitter or something like that. Or something like making T-shirts and with meaningful words or images that would caught people’s attention into it and try to make them think or change their mind and start to do something. Also, another way to do is simple just remind people to donate and that’s it.

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Poverty in the World. (2021, Apr 16). Retrieved from https://papersowl.com/examples/poverty-in-the-world/

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