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What is Poverty? The Causes, Facts, and Ways to Take Action

In 2022, the World Bank estimated that about 8% of the world’s population (which is almost 650 million people) lived on less than $2.15 per day. This state is known as “extreme poverty.” While extreme poverty is the most urgent issue, 47% of the world’s population is still struggling with less than $6.85 per day. What is poverty exactly?

In this article, we’ll provide a thorough definition alongside key facts everyone should know and the best ways to take action.

Poverty occurs when individuals and communities don’t have enough money or resources for a basic standard of living. That includes good housing, food, clean water, healthcare, and much more. COVID-19 stalled years of progress on ending poverty, which makes solutions like improved gender equity, universal health coverage, and taxes on the world’s richest all the more essential.

What is poverty?

Poverty happens when someone lacks the income and resources necessary to maintain a good standard of living. That includes safe housing, medical care, food, clean water, and so on. The UN emphasizes that it’s also “more than a lack of income.” There are varying socioeconomic factors at play such as race, sexuality, ethnicity, gender, the ability to access services, and opportunities for decent work. Poverty also drives many social issues like poor education, child labor, forced labor, poor health, violence, and more.

For years, extreme poverty – which affects the poorest people on Earth – referred to living on less than $1.90 a day. In 2022, the World Bank updated its line to $2.15. It was changed to reflect cost increases for basic food, clothing, and shelter in low-income countries between 2011 and 2017 relative to the rest of the world. $2.15 in 2017 prices is equal to $1.90 in 2011 prices. Before COVID-19, the world was doing a decent job reducing extreme poverty. According to the World Bank’s Poverty and Shared Prosperity report, 1 billion people escaped extreme poverty over 30 years. Then, COVID hit. In 2020, 70 million fell below the extreme poverty line. Based on estimates, about 7% of the world (most in Africa) will still be in extreme poverty by 2030. There’s also the matter of those vulnerable to poverty. These are people living on $2-$5 per day. There are 1.3 billion in this group. One financial setback like an illness, injury, job loss, or other crisis would be enough to push them into extreme poverty.

What causes poverty?

Many factors drive poverty, which is one of the reasons why it’s so difficult to eliminate. Here are five causes:

A lack of good education

Education is key to breaking long poverty cycles. Without a good education, it’s very difficult for people to get better-paying jobs that help them afford necessities and build wealth. A 2017 report from UNESCO and the Global Education Monitoring Report found that if all adults finished secondary school, the global poverty rate could be cut in half. Unfortunately, for those who are already in poverty, completing school is often difficult or impossible. Governments and NGOs need to step in to ensure students get as much education as possible.

Conflict and war

Conflict and poverty have a close, reinforcing relationship. Poverty fuels conflict. Conflict can then make poverty worse. The most obvious reason is that conflict disrupts people’s lives and destroys infrastructure. Those displaced by violence – especially women, children, disabled people, and the elderly – are much more likely to fall into poverty. Even when a conflict has ended, recovery can take a long time and fail to support the most harmed.

Environmental disasters and climate change

Like conflict, environmental disasters disrupt communities and destroy infrastructure. Climate change is quickly becoming a persistent source of disasters worldwide. While the world’s poorest contribute the least to climate change, they’re impacted the most. This is because poor people depend on agriculture, which climate change disrupts through floods, famines, hurricanes, and more. If significant changes aren’t made, climate change could push 130 million people into extreme poverty over the next decade.

Inaccessible healthcare

Poor healthcare is both a cause and a consequence of poverty. Cost is a big reason why. One expensive emergency can tip people into poverty and keep them there. Poverty also increases the risk of health issues that quickly drain a person’s wallet. There are issues beyond pure cost, however. Disenfranchised groups aren’t given equal access to information, services, nutritious food, and other resources necessary for good health. Even if healthcare were more affordable, there would be other steps needed to make it truly accessible.

Social injustice

There’s an established link between poverty and social injustices like racism and gender inequality. Take the United States. According to research from sociologist Regina Baker, Black populations living in southern states with a “strong historical racial regime” experience worse poverty. There’s also a wider poverty gap between Black and white populations in these states. Worldwide, gender inequality and poverty are deeply linked. If everyone received equal rights and opportunities, it would eliminate a lot of poverty.

What are the main facts about poverty?

There’s a lot to know about poverty, but here are three main facts everyone should remember:

#1. Around 1 billion children live in poverty

Children are deeply affected by poverty. According to UNICEF, 1 billion kids don’t have access to education, housing, nutrition, water, sanitation, or healthcare. Around 356 of those kids are living in extreme poverty. As a result, kids from the poorest households die at twice the rate of kids who aren’t as poor. The kids that do survive continue to face difficulties like poor nutrition, chronic disease, mental health problems, and hindered emotional development. Childhood poverty could even cause long-term effects on the brain, though environmental factors affect behavior, too.

#2. Poverty is concentrated in a few areas

According to data from the World Bank, South Sudan has the highest poverty rate at 82.30%. Equatorial Guinea is next at 76.80%. This is followed by Madagascar (70.70%), Guinea-Bissau (69.30%), and Eritrea (69.30%). In Burundi, which is a small country in East Africa with 12.1 million people, 70% of the population is poor. 52% of kids under 5 have stunted growth and high levels of malnutrition. In terms of GDP per capita, Burundi is the poorest country in the world.

#3. It’s not just poverty; it’s wealth inequality

Wealth inequality refers to differences in income, as well as the value of stocks, investments, houses, personal possessions, and so on. According to the World Bank Gini Index, South Africa has the highest rate of wealth inequality: 63%. That’s followed by Namibia (59.1%) and Suriname (57.9%). The United States, which has the largest economy in the world, also has issues. 2021 data showed that income at the top of the income distribution was 13.53 times higher than income at the bottom. Inequality is a global problem; in the past ten years, the world’s richest 1% have gotten almost 50% of all new wealth.

How can the world eliminate poverty?

The world was making great progress on ending poverty until COVID-19. Things need to improve quickly if we’re going to achieve SDG Goal #1 by 2030. Because poverty is such a complex, large-scale issue, it’s hard for individuals to make much of a difference on their own. However, people can educate themselves on the best solutions and pressure those in power to take action. Here are three solutions to learn more about:

#1. Focus on gender equity

As we mentioned before, poverty and gender inequality are deeply linked. It’s impossible to eliminate poverty without gender equality. According to the World Bank, about 2.4 billion women of working age aren’t getting equal economic opportunities. 95 countries don’t mandate equal pay for equal work. Improving equity would lift a huge number of women and their families out of poverty. What can individuals do to help? Support organizations that focus on women and children. Advocate for better policies at your workplace, like more paid family leave, more flexible hours, and an end to gender pay gaps.

#2. Advocate for universal health coverage

According to the WHO, universal healthcare is the assurance that everyone has “access to the full range of quality health services they need, when and where they need them, without financial hardship.” It’s a key part of eliminating poverty. While there was progress before COVID-19, 2 billion people are facing what the WHO calls “catastrophic or impoverishing health spending.” Individuals can support universal health coverage by donating to organizations and pressuring leaders to pass legislation.

#3. Tax the rich

According to an Oxfam report called Survival of the Richest, the fortunes of billionaires are rising by $2.7 billion a day. Meanwhile, 1.7 billion workers live in countries where inflation is rising faster than wages. In 2022, 95 food and energy corporations more than doubled their profits, which were passed on to billionaire shareholders. These massive corporate profits also drove half of the inflation in the US, UK, and Australia. If the world wants to end poverty, these excesses need to be addressed. According to the Oxfam report, a tax of up to 5% on the world’s richest could raise $1.7 trillion a year. That’s enough to help 2 billion people escape poverty.

About the author

Emmaline Soken-Huberty

Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women’s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon’s natural beauty with her husband and dog.