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Causes of Poverty

Last updated date: 20th May 2024
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Poverty has a simple definition. Its onset is when a person or family does not have enough to meet their basic needs. Food, clothing, and shelter are the most basic needs. Contextually, poverty can have varied meanings, such as no electricity, no sanitization facility, no education, etc. But the worldwide meaning of poverty is rooted in the most essentials required for sustaining a person.

The World Bank Organization classified poverty as being hungry and not having food to eat, lack of shelter, being sick, and not being able to afford medicine. As per the World Bank, poverty is not about not having access to school or being illiterate. 

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How is Poverty Measured?

In most countries, poverty is measured by comparing a person’s or family’s income to a national threshold amount. Any person or family with income below this threshold is said to be poor. In India, this category of people is classified into the BPL (Below Poverty Line) category. 

There are Various Phases to Measure Poverty:

Identification Stage

Governments across the world have their thresholds for defining poverty. On both sides of this threshold, the poor, the middle-class, and the rich are identified. There has always been discussions and deliberations on the welfare indicators and dimensions that are to be used for measuring poverty. The two approaches in this regard are absolute and relative regarding the median poverty line.

Absolute Poverty vs. Relative Poverty

Absolute poverty is when the income of a household falls below a certain threshold. Lack of income makes it not possible for a person or family to take care of its basic needs. In such a state of poverty, there is no influence on the country's economic growth on the person or family. Mainly because poverty becomes a vicious cycle, coming out of it may take drastic measures by the individuals of the family. Absolute poverty measures household income based on a pre-determined income level. This threshold income level is generally not revised and is constant. Absolute poverty varies by country. 

Relative poverty is when households have money but still not enough money. This type of poverty is less severe. It can be changed depending on the economic conditions of the country. Sometimes referred to as relative deprivation, people in this category may not enjoy the same lifestyle as families above the poverty line. As an example, a household that does not have a television, Internet connection, refrigerator, microwave oven in a developed country could be classified as having relative poverty. 

What is Multi-dimensional Deprivation?

Multi-dimensional deprivation is another type of poverty that is a combination of absolute poverty and relative poverty, as well as severe poverty. It is linked to being socially isolated. People in these strata of society lack access to essential goods, commodities, amenities, or services. Non-monetary indicators and deprivation variables are used to frame poverty measures. Multi-dimensional deprivation is a form of severe poverty. The following image shows data from the World Bank on regional disparities. 

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What is Severe Poverty?

Extreme poverty, absolute poverty, or severe poverty are defined by the United Nations as poverty. The affected are severely or fatally denied access or do not have the means to provide for food, shelter, clothing, and medicines. So this type of poverty is a combination of absolute poverty and multi-dimensional poverty.

What are Some of the Factors that Exacerbate Absolute and Relative Poverty?

Extreme poverty is difficult to shed off by societies unless societies and the government undertake a concerted, focused effort. Some of the factors that prolong or worsen poverty are:

  • Weak Institutions  

Despite receiving funding from international charitable entities and the local government or beneficiaries, institutions that implement poverty eradication schemes might be plagued by fraudulent practices. Corruption and misappropriation of funds could deny people below the poverty line a chance to redeem themselves and get out of the crisis. Weak institutions also refer to governments, government policies, and schemes that do not adopt a structured approach to mitigate poverty, slow it down, and eventually eradicate it. They seldom have the long term vision and focus to achieve it.

  • Civil Conflict 

In many countries, internal strife squeezes all government resources, including relief funds and reserve funds, leaving little or nothing for eradicating poverty. The aftereffects of civil wars are far-reaching – their economic impact on a nation last several years. During this time, people affected with absolute poverty are unable to rebuild their situations because of incumbent economic conditions. A relative poverty definition is not applicable in such regions as generally, a majority of the population is affected.  

Did you know? Children and young adults represent two-thirds of the world's population affected by poverty, and amongst this demographic, women are the most affected.


Some Facts to Ponder Over

  • In the Middle East and North Africa, as of 2018, poverty doubled from 3.8% to 7.2% because of the Yemen and Syrian war. That almost 70 people poor per 1000 people. Absolute poverty definition, in this case, is due to war contributed to economic strife.

  • Multi-dimensional poverty affects children the most. 644 million of those affected are children.

FAQs on Causes of Poverty

1. What is the International Poverty Line?

Currently, the international poverty line income is set at $1.90 per day. This is the benchmark or worldwide reference point to measure against. This benchmark could change depending on factors such as inflation and the cost of living.

The following are the indicators that are part of the estimation process to derive the international poverty line.

  • Food, body mass index

  • Safe drinking water

  • Sanitation

  • Health and treatment

  • Shelter

  • Education

  • Access to information and services

In developing countries, national poverty lines are based on splitting regions into urban, rural, and semi-urban and coming up with an estimate based on people's income in a particular region.

2. From Where Did the Term 'War on Poverty' Emerge, and What is it About?

In 1964, President Lyndon Johnson coined this term. He talked specifically about his countrymen and countrywomen and acknowledged that more than a fifth of the people lives in poverty. During this tenure, he launched many programs to counter poverty, namely, social security benefits, subsidized schools, food stamps program, medicare, Medicaid, etc. 

The War on Poverty is more of an international movement undertaken by volunteering organizations and private entities such as NGOs. There is no single conclave that aggregates on participants engaged in this global war on poverty. Rather, it is currently used in the context of phraseology to connote a complete eradication of poverty. 

3. What are the Sustainable Development Goals?

Proposed by the UN working group, Sustainable Development Goals aim to eradicate poverty from the face of the planet by 2030. This is a set of action plans that largely targets people with incomes below a dollar to achieve an income more than the international poverty line threshold.

Also called Global Goals, it is a collection of multiple interlinked goals. As of the last charter held, there are 17 goals. The goals are namely, clean water, clean energy, economic growth, infrastructure, peace, justice, gender equality, no poverty, no hunger, responsible consumption, and manufacturing, reducing overall inequality, sustainable cities, life on land.