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Why even brilliant scholars misunderstand poverty in America

Housing expert Matthew Desmond argues poverty has stagnated in America, but misses something big.

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Matthew Desmond, the acclaimed Princeton sociologist and author of Evicted: Poverty and Profit in the American City , thinks that poverty has barely improved in the United States over the past 50 years — and he has a theory why. Laid out in a long essay for the New York Times Magazine that is adapted from his forthcoming book Poverty, by America , Desmond’s theory implicates “exploitation” in the broadest sense, from a decline in unions and worker power to a proliferation of bank fees and predatory landlord practices, all of which combine to keep the American underclass down.

Desmond, who won a Pulitzer Prize in 2017 for Evicted , is an original and nuanced thinker and I cannot do his 6,000-word argument justice in a short article. But I do know a little bit about how we measure poverty, and I want to back up briefly and interrogate Desmond’s fundamental premise: Has poverty in America persisted ? Is it true that in recent decades, as Desmond writes, “On the problem of poverty ... there has been no real improvement — just a long stasis”? Is it true, as he posits, that the large increase in government spending on antipoverty programs in recent decades (a 130 percent increase from 1980 to 2018, by his numbers) hasn’t made a dent in poverty?

There is widespread disagreement, including among experts, about how to define “poverty.” But contrary to Desmond’s claim that the stagnation “cannot be chalked up to how the poor are counted,” I would insist the answer to whether poverty has fallen or stagnated in America depends entirely on how the poor are counted.

One set of approaches gives a clear answer: Poverty has plummeted dramatically since the 1960s due to a huge increase in government spending on programs that help lower-income people . Another set of approaches suggests that poverty has, as Desmond insists, stagnated (and would have risen absent that government spending ).

Both these approaches have useful, distinct stories to tell us about poverty in America. One point they agree on, though, is that safety net programs like the Supplemental Nutrition Assistance Program (SNAP, sometimes known as food stamps), Medicaid, Social Security, and the earned income tax credit have played an important role in reducing poverty. That is, Desmond’s core premise, that expanding safety net programs haven’t slashed poverty, is wrong. They have. You just need to measure poverty carefully.

How to measure poverty

To come up with a poverty measure, one generally needs two things: a threshold at which a household becomes “poor” and a definition of income. For instance, in 2023, a family of four is defined by the government as officially in poverty in the US if they earn $30,000 or less. That’s the Official Poverty Measure’s threshold, and weirdly it’s the same for 48 states and DC, but higher in Alaska and Hawaii, supposedly due to their higher cost of living.

But what does it mean to earn $30,000 or less? Should we just count cash from a job? What about pensions and retirement accounts? What about Social Security, which is kind of like a pension? What about resources like SNAP that aren’t money but can be spent in some ways like money? What about health insurance?

These aren’t simple questions to answer, and scholars like the late, great Rebecca Blank devoted much of their careers to trying to answer them. But I think it’s fair to say there’s a broad consensus among researchers that income should be defined very broadly. It should at the very least include things like tax refunds and SNAP that are close to cash, and simpler to include than benefits like health insurance.

That’s why there’s also near-unanimous consensus among poverty researchers that the official poverty measure (OPM) in the United States is a disaster . I have written about poverty policy for over a decade and have never heard even one expert argue it is well-designed. I was frankly a little shocked to see Desmond cite it without qualification in his article.

Its biggest flaw is that it uses a restrictive and incoherent definition of income. Some government benefits, like Social Security, Supplemental Security Income (SSI), and Temporary Assistance to Needy Families (TANF), count. But others, like tax credits, SNAP, and health care, don’t count at all. So many programs designed to cut poverty, like SNAP or Medicaid or the earned income tax credit, therefore by definition cannot reduce the official poverty rate because they do not count as income.

The Census Bureau now publishes a supplemental poverty measure (SPM), which uses a much more comprehensive definition of income that includes the social programs the OPM excludes. It also varies thresholds regionally to account for different costs of living, rather than simply breaking off Alaska and Hawaii. That’s a clear improvement.

Some experts, notably economists Bruce D. Meyer and James X. Sullivan , argue that looking for a definition of income is itself a mistake: Poverty is most usefully defined in terms of consumption, the resources people actually buy and consume. They argue this makes conceiving of benefits like Medicaid easier. Getting Medicaid is hard to think of as “income,” but enrollees are definitely “consuming” things like doctor’s visits, prescription drugs, etc, that they would struggle to obtain without those benefits.

But overall, disputes among poverty experts about how to define income or consumption or “resources” tend, in my experience, to be muted compared to disputes over where to draw the thresholds: where to set the poverty line and how to adjust it over time.

The simplest way to approach this is to do what the official poverty measure does: Take a set amount of money and adjust it for inflation over time. Specifically, the poverty rate was devised in 1963 by Mollie Orshansky , an economist at the Social Security Administration, based on the US Department of Agriculture’s 1961 estimate, which itself was based on 1955 data, of how much money a family of four would need for food, if they were really pinching pennies. Orshansky tripled this estimate, since families of three more typically spent a third of their income on food at the time. (Americans now spend only about 10 percent of income on food, though the subset of families that Orshansky was looking at may spend more.)

That was the poverty line, and it has not changed since, with the exception of annual adjustments according to the Consumer Price Index.

That is, of course, an incredibly arbitrary threshold to draw, and it’s almost a cliché at this point to note how dumb it is. There’s an episode of The West Wing with a subplot about how old and dumb and outdated the poverty line is, and that episode is itself now over 21 years old.

But experts are split on what a better line to draw would be.

Absolute versus relative poverty

The official poverty measure is what’s sometimes known as an “absolute” poverty measure. Measures like this generally only adjust their thresholds for inflation. Many are based on less arbitrary numbers than “what people spent on food in 1955,” and many use different measurements of inflation, since a lot of economists think the Consumer Price Index overstates price increases compared to the Personal Consumption Expenditures (PCE) or chained CPI measures. But they fundamentally have a lot in common with the OPM’s approach: They set a dollar threshold for who is and isn’t poor and stick to it.

Absolute poverty measures are crystal clear about what has happened to poverty since the 1960s: It plummeted. The below chart shows three different absolute measures, all of which use expansive income definitions, unlike the official rate. All three have fallen dramatically.

(Many thanks to economist Kevin Corinth for passing along this series from his working paper with Richard Burkhauser, James Elwell, and Jeff Larrimore.)

The primary case for absolute measures like these is that they’re easy to interpret. Because the thresholds only change due to inflation, changes in the poverty rate only happen because people near the bottom get richer or poorer. If poverty falls, it’s because some low-income people gained more money or resources. If it increases, it’s because some low-income people lost out. Insofar as those kinds of material changes at the bottom are the main thing one cares about, absolute measures can be helpful. As a group of Columbia researchers argued in 2016 , absolute measures are “more useful for establishing how families’ resources have changed against a fixed benchmark.”

Applied to the US, the takeaway is that many fewer people are living on a very small amount of money than was the case in the 1960s.

But many poverty scholars prefer to use what are called “relative” measures. Such measures set the threshold as a percentage of the country in question’s median income (usually 50 or 60 percent). Most rich countries other than the US define poverty in this way. The European Union, for instance, uses what it calls an “at risk of poverty” rate , defined as the share of residents in a country living on less than 60 percent of the median disposable income. The United Kingdom uses a “households below average income” (HBAI) statistic, with the main threshold set to 60 percent of median income.

The case for relative measures is that poverty is socially defined, and “being in poverty” is usually thought of as people not being able to exist with the level of comfort that is normal in the society in which they live. A common definition, from the British scholar Peter Townsend , posits that poverty is “the absence or inadequacy of those diets, amenities, standards, services and activities which are common or customary in society.” Commonness or customariness are relative attributes, not absolute ones. Some, like sociologist David Brady, have also argued for relative measures on the grounds that they correlate better with self-reported mental and physical health and well-being .

Looked at in relative terms, poverty hasn’t fallen in the US in recent decades. It’s stagnated:

Advocates of absolute measures counter that relative poverty measures inequality rather than actual deprivation. Bruce Meyer, for instance, cites the experience of Ireland in the 2000s , which experienced “real growth in incomes throughout the distribution including the bottom. However, because the middle grew a bit faster than the bottom, a relative poverty measure shows an increase in poverty. Thus, we have a situation of nearly everyone being better off, but poverty nonetheless rising.” The reverse can happen in recessions, where if median incomes fall faster than incomes at the bottom, poverty can fall, even though everyone’s worse off.

Some measures, sometimes called “quasi-relative” or “semi-relative,” split the difference between the two approaches. They don’t merely vary with inflation, but they’re not a simple percentage of average incomes, either. The US supplemental poverty measure is a good example: It’s based on the 33rd percentile of spending on “food, clothing, shelter, and utilities” (FCSU). That is, researchers rank households by the amount they spend on those categories, find the point such that a third of households are below it and two-thirds are above, and use that as the basis for the SPM line. Because spending on these goods varies year to year, the thresholds change year to year, and not just based on inflation, but the change tends to be minimal compared to the changes in pure relative measures.

Government taxing and spending has become more important in fighting poverty

So … who’s right? The boring but correct answer is that these measures capture different things and each tells us something interesting. The fall in absolute poverty tells us that fewer people are living on very low cash incomes than were in, say, 1980. One estimate suggests that the fall in absolute poverty since 1967 means that 55 million fewer people lived in poverty in 2020 than would have if absolute poverty had stagnated.

The stagnation in relative incomes tells us that income growth at the bottom isn’t faster than growth at the middle and that there’s still a substantial share of America living on substantially below-average incomes — with 23.1 percent of Americans living in poverty under the definition used by the EU and UK (compared to 15.5 percent in the UK and 16.5 percent in the EU).

I do, however, want to highlight a point where absolute and relative poverty measures align: Government spending on social programs plays an important role in reducing poverty, and such spending does more to fight poverty now than it did in the recent past.

One highly cited absolute poverty measure is the “anchored” supplemental poverty measure , produced by Columbia researchers Christopher Wimer, Liana Fox, Irwin Garfinkel, Neeraj Kaushal, and Jane Waldfogel. This measure simply uses the Supplemental Poverty Measure thresholds from 2012 and extends them back to 1967.

This measure shows a substantial decline in poverty — but more importantly, it shows that government transfer programs are the only reason poverty has substantially declined. Before taxes and transfers, the poverty rate by this metric was 26.4 percent in 1967 and 22.5 percent in 2019. In the pandemic year of 2020, it shot up to 24.9 percent, barely different from 53 years previous. But after taxes and transfers, poverty fell from 25 percent in 1967 to 11.2 percent in 2019 — and to 8.4 percent amid the flood of stimulus money in 2020. The big story here is that government programs are doing much more than they did in the 1960s or 1980s to slash poverty.

One sees the same pattern in relative poverty. A 2019 paper by researchers Koen Caminada, Jinxian Wang, Kees Goudswaard, and Chen Wang for LIS, an international research center for income and poverty issues, estimates that in 1985, taxes and transfers in the US reduced relative poverty by 6.2 points. In 2013, the reduction was 9.7 points. Without government intervention, relative poverty would have increased from 1985 to 2013; instead, it merely stagnated.

Desmond, in his essay, spends some time marveling that “federal investments in means-tested programs increased by 130 percent from 1980 to 2018,” a fact he finds hard to square with the official poverty rate remaining flat. Surely that spending should have reduced poverty!

The answer here is simple: It did reduce poverty. The escalation of government investment made a difference, no matter what reputable poverty data you look at, whether absolute or relative. The only data series where it doesn’t make a difference is the official poverty measure, which literally does not consider most of this spending and acts like it does not exist.

The points Desmond makes about forces of exploitation in the markets poor people interact with — from payday lenders to bosses who can take advantage of their monopoly power and weakened unions to set low wages to the landlords he profiled in his breakout book — are well-taken. These could very well help explain why poverty would have stagnated or risen without government intervention, and addressing them might prove effective at fighting poverty. But there’s no need to couple this argument with claims that government spending has done nothing to reduce poverty. It has done a tremendous amount.

Much of the confusion in Desmond’s piece is not his fault, exactly. It’s the fault of the US government and its official poverty measure. Congress and the Department of Health and Human Services urgently need to abolish the OPM. It’s a bad number that tells a misleading story about poverty in America, and acting to replace it would do a lot of good.

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By Joe Hasell, Max Roser, Esteban Ortiz-Ospina and Pablo Arriagada

Global poverty is one of the most pressing problems that the world faces today. The poorest in the world are often undernourished , without access to basic services such as electricity and safe drinking water ; they have less access to education , and suffer from much poorer health .

In order to make progress against such poverty in the future, we need to understand poverty around the world today and how it has changed.

On this page you can find all our data, visualizations and writing relating to poverty. This work aims to help you understand the scale of the problem today; where progress has been achieved and where it has not; what can be done to make progress against poverty in the future; and the methods behind the data on which this knowledge is based.

Key Insights on Poverty

Measuring global poverty in an unequal world.

There is no single definition of poverty. Our understanding of the extent of poverty and how it is changing depends on which definition we have in mind.

In particular, richer and poorer countries set very different poverty lines in order to measure poverty in a way that is informative and relevant to the level of incomes of their citizens.

For instance, while in the United States a person is counted as being in poverty if they live on less than roughly $24.55 per day, in Ethiopia the poverty line is set more than 10 times lower – at $2.04 per day. You can read more about how these comparable national poverty lines are calculated in this footnote. 1

To measure poverty globally, however, we need to apply a poverty line that is consistent across countries.

This is the goal of the International Poverty Line of $2.15 per day – shown in red in the chart – which is set by the World Bank and used by the UN to monitor extreme poverty around the world.

We see that, in global terms, this is an extremely low threshold indeed – set to reflect the poverty lines adopted nationally in the world’s poorest countries. It marks an incredibly low standard of living – a level of income much lower than just the cost of a healthy diet .

From $1.90 to $2.15 a day: the updated International Poverty Line

What you should know about this data.

• Global poverty data relies on national household surveys that have differences affecting their comparability across countries or over time. Here the data for the US relates to incomes and the data for other countries relates to consumption expenditure. 2
• The poverty lines here are an approximation of national definitions of poverty, made in order to allow comparisons across the countries. 1
• Non-market sources of income, including food grown by subsistence farmers for their own consumption, are taken into account. 3
• Data is measured in 2017 international-$, which means that inflation and differences in the cost of living across countries are taken into account. 4

Global extreme poverty declined substantially over the last generation

Over the past generation extreme poverty declined hugely. This is one of the most important ways our world has changed over this time.

There are more than a billion fewer people living below the International Poverty Line of $2.15 per day today than in 1990. On average, the number declined by 47 million every year, or 130,000 people each day. 5

The scale of global poverty today, however, remains vast. The latest global estimates of extreme poverty are for 2019. In that year the World Bank estimates that around 650 million people – roughly one in twelve – were living on less than $2.15 a day.

Extreme poverty: how far have we come, how far do we still have to go?

• Extreme poverty here is defined according to the UN’s definition of living on less than $2.15 a day – an extremely low threshold needed to monitor and draw attention to the living conditions of the poorest around the world. Read more in our article, From $1.90 to $2.15 a day: the updated International Poverty Line .
• Global poverty data relies on national household surveys that have differences affecting their comparability across countries or over time. 2
• Surveys are less frequently available in poorer countries and for earlier decades. To produce regional and global poverty estimates, the World Bank collates the closest survey for each country and projects the data forward or backwards to the year being estimated. 6
• Data is measured in 2017 international-$, which means that inflation and differences in the cost of living across countries are taken into account . 4

The pandemic pushed millions into extreme poverty

Official estimates for global poverty over the course of the Coronavirus pandemic are not yet available.

But it is clear that the global recession it brought about has had a terrible impact on the world’s poorest.

Preliminary estimates produced by researchers at the World Bank suggest that the number of people in extreme poverty rose by around 70 million in 2020 – the first substantial rise in a generation – and remains around 70-90 million higher than would have been expected in the pandemic’s absence. On these preliminary estimates, the global extreme poverty rate rose to around 9% in 2020. 7

• Figures for 2020-2022 are preliminary estimates and projections by World Bank researchers, based on economic growth forecasts. The pre-pandemic projection is based on growth forecasts prior to the pandemic. You can read more about this data and the methods behind it in the World Bank’s Poverty and Shared Prosperity 2022 report. 8

Hundreds of millions will remain in extreme poverty on current trends

Extreme poverty declined during the last generation because the majority of the poorest people on the planet lived in countries with strong economic growth – primarily in Asia.

The majority of the poorest now live in Sub-Saharan Africa, where weaker economic growth and high population growth in many countries has led to a rising number of people living in extreme poverty.

The chart here shows projections of global extreme poverty produced by World Bank researchers based on economic growth forecasts. 9

A very bleak future is ahead of us should such weak economic growth in the world’s poorest countries continue – a future in which extreme poverty is the reality for hundreds of millions for many years to come.

• The extreme poverty estimates and projections shown here relate to 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. You can read more about this change and how it affected the World Bank estimates of poverty in our article From $1.90 to $2.15 a day: the updated International Poverty Line .
• Figures for 2018 and beyond are preliminary estimates and projections by Lakner et al. (2022), based on economic growth forecasts. You can read more about this data and the methods behind it in the related blog post. 10
• Data is measured in 2011 international-$, which means that inflation and differences in the cost of living across countries are taken into account. 4

The rapid progress seen in many countries shows an end to poverty is possible

Each of the countries shown in the chart achieved large declines in extreme poverty over the last generation. 11

The fact that rapid progress against poverty has been achieved in many places is one of the most important lessons we can learn from the available data on extreme poverty.

For those who are not aware of such progress – which is the majority of people – it would be easy to make the mistake of believing that poverty is inevitable and that action to tackle poverty is hence doomed to fail.

The huge progress seen in so many places shows that this view is incorrect.

After 200 years of progress the fight against global poverty is just beginning

Over the past two centuries the world made good progress against extreme poverty. But only very recently has poverty fallen at higher poverty lines.

Global poverty rates at these higher lines remain very high:

• 25% of the world lives on less than $3.65 per day – a poverty line broadly reflective of the lines adopted in lower-middle income countries.
• 47% of the world lives on less than $6.85 per day – a poverty line broadly reflective of the lines adopted in upper-middle income countries.
• 84% live on less than $30 per day – a poverty line broadly reflective of the lines adopted in high income countries. 12

Economic growth over the past two centuries has allowed the majority of the world to leave extreme poverty behind. But by the standards of today’s rich countries, the world remains very poor. If this should change, the world needs to achieve very substantial economic growth further still.

The history of the end of poverty has just begun

How much economic growth is necessary to reduce global poverty substantially?

• The data from 1981 onwards is based on household surveys collated by the World Bank. Earlier figures are from Moatsos (2021), who extends the series backwards based on historical reconstructions of GDP per capita and inequality data. 13
• All data is measured in international-$ which means that inflation and differences in purchasing power across countries are taken into account. 4
• The World Bank data for the higher poverty lines is measured in 2017 international-$. Recently, the World Bank updated its methodology having previously used 2011 international-$ to measure incomes and set poverty lines. The Moatsos (2021) historical series is based on the previously-used World Bank definition of extreme poverty – living on less than $1.90 a day when measured in 2011 international-$. This is broadly equivalent to the current World Bank definition of extreme poverty – living on less than $2.15 a day when measured in 2017 international-$. You can read more about this update to the World Bank’s methodology and how it has affected its estimates of poverty in our article From $1.90 to $2.15 a day: the updated International Poverty Line .
• The global poverty data shown from 1981 onwards relies on national household surveys that have differences affecting their comparability across countries or over time. 2
• Such surveys are less frequently available in poorer countries and for earlier decades. To produce regional and global poverty estimates, the World Bank collates the closest survey for each country and projects the data forward or backwards to the year being estimated. 6
• Non-market sources of income, including food grown by subsistence farmers for their own consumption, are taken into account. This is also true of the historical data – in producing historical estimates of GDP per capita on which these long-run estimates are based, economic historians take into account such non-market sources of income, as we discuss further in our article How do we know the history of extreme poverty?

Explore Data on Poverty

About this data.

All the data included in this explorer is available to download in GitHub , alongside a range of other poverty and inequality metrics.

Where is this data sourced from?

This data explorer is collated and adapted from the World Bank’s Poverty and Inequality Platform (PIP).

The World Bank’s PIP data is a large collection of household surveys where steps have been taken by the World Bank to harmonize definitions and methods across countries and over time.

About the comparability of household surveys

There is no global survey of incomes. To understand how incomes across the world compare, researchers need to rely on available national surveys.

Such surveys are partly designed with cross-country comparability in mind, but because the surveys reflect the circumstances and priorities of individual countries at the time of the survey, there are some important differences.

Income vs expenditure surveys

One important issue is that the survey data included within the PIP database tends to measure people’s income in high-income countries, and people’s consumption expenditure in poorer countries.

The two concepts are closely related: the income of a household equals their consumption plus any saving, or minus any borrowing or spending out of savings.

One important difference is that, while zero consumption is not a feasible value – people with zero consumption would starve – a zero income is a feasible value. This means that, at the bottom end of the distribution, income and consumption can give quite different pictures about a person’s welfare. For instance, a person dissaving in retirement may have a very low, or even zero, income, but have a high level of consumption nevertheless.

The gap between income and consumption is higher at the top of this distribution too, richer households tend to save more, meaning that the gap between income and consumption is higher at the top of this distribution too. Taken together, one implication is that inequality measured in terms of consumption is generally somewhat lower than the inequality measured in terms of income.

In our Data Explorer of this data there is the option to view only income survey data or only consumption survey data, or instead to pool the data available from both types of survey – which yields greater coverage.

Other comparability issues

There are a number of other ways in which comparability across surveys can be limited. The PIP Methodology Handbook provides a good summary of the comparability and data quality issues affecting this data and how it tries to address them.

In collating this survey data the World Bank takes a range of steps to harmonize it where possible, but comparability issues remain. These affect comparisons both across countries and within individual countries over time.

To help communicate the latter, the World Bank produces a variable that groups surveys within each individual country into more comparable ‘spells’. Our Data Explorer provides the option of viewing the data with these breaks in comparability indicated, and these spells are also indicated in our data download .

Global and regional poverty estimates

Along with data for individual countries, the World Bank also provides global and regional poverty estimates which aggregate over the available country data.

Surveys are not conducted annually in every country however – coverage is generally poorer the further back in time you look, and remains particularly patchy within Sub-Saharan Africa. You can see that visualized in our chart of the number of surveys included in the World Bank data by decade.

In order to produce global and regional aggregate estimates for a given year, the World Bank takes the surveys falling closest to that year for each country and ‘lines-up’ the data to the year being estimated by projecting it forwards or backwards.

This lining-up is generally done on the assumption that household incomes or expenditure grow in line with the growth rates observed in national accounts data. You can read more about the interpolation methods used by the World Bank in Chapter 5 of the Poverty and Inequality Platform Methodology Handbook.

How does the data account for inflation and for differences in the cost of living across countries?

To account for inflation and price differences across countries, the World Bank’s data is measured in international dollars. This is a hypothetical currency that results from price adjustments across time and place. It is defined as having the same purchasing power as one US-$ would in the United States in a given base year. One int.-$ buys the same quantity of goods and services no matter where or when it is spent.

There are many challenges to making such adjustments and they are far from perfect. Angus Deaton ( Deaton, 2010 ) provides a good discussion of the difficulties involved in price adjustments and how this relates to global poverty measurement.

But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.

In September 2022, the World Bank updated its methodology, and now uses international-$ expressed in 2017 prices – updated from 2011 prices. This has had little effect on our overall understanding of poverty and inequality around the world. But poverty estimates for particular countries vary somewhat between the old and updated methodology. You can read more about this update in our article From $1.90 to $2.15 a day: the updated International Poverty Line .

To allow for comparisons with the official data now expressed in 2017 international-$ data, the World Bank continues to release its poverty and inequality data expressed in 2011 international-$ as well. We have built a Data Explorer to allow you to compare these, and we make all figures available in terms of both sets of prices in our data download .

Absolute vs relative poverty lines

This dataset provides poverty estimates for a range of absolute and relative poverty lines.

An absolute poverty line represents a fixed standard of living; a threshold that is held constant across time. Within the World Bank’s poverty data, absolute poverty lines also aim to represent a standard of living that is fixed across countries (by converting local currencies to international-$). The International Poverty Line of $2.15 per day (in 2017 international-$) is the best known absolute poverty line and is used by the World Bank and the UN to measure extreme poverty around the world.

The value of relative poverty lines instead rises and falls as average incomes change within a given country. In most cases they are set at a certain fraction of the median income. Because of this, relative poverty can be considered a metric of inequality – it measures how spread out the bottom half of the income distribution is.

The idea behind measuring poverty in relative terms is that a person’s well-being depends not on their own absolute standard of living but on how that standard compares with some reference group, or whether it enables them to participate in the norms and customs of their society. For instance, joining a friend’s birthday celebration without shame might require more resources in a rich society if the norm is to go for an expensive meal out, or give costly presents.

Our dataset includes three commonly-used relative poverty lines: 40%, 50%, and 60% of the median.

Such lines are most commonly used in rich countries, and are the main way poverty is measured by the OECD and the European Union .More recently, relative poverty measures have come to be applied in a global context. The share of people living below 50 per cent of median income is, for instance, one of the UN’s Sustainable Development Goal indicators . And the World Bank now produces estimates of global poverty using a Societal Poverty Line that combines absolute and relative components.

When comparing relative poverty rates around the world, however, it is important to keep in mind that – since average incomes are so far apart – such relative poverty lines relate to very different standards of living in rich and poor countries.

Does the data account for non-market income, such as food grown by subsistence farmers?

Many poor people today, as in the past, rely on subsistence farming rather than a monetary income gained from selling goods or their labor on the market. 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.

Research & Writing

Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world.

$2.15 a day: the updated International Poverty Line

What does the World Bank’s updated methods mean for our understanding of global poverty?

Global poverty over the long-run

How do we know the history of extreme poverty?

Joe Hasell and Max Roser

Breaking out of the Malthusian trap: How pandemics allow us to understand why our ancestors were stuck in poverty

The short history of global living conditions and why it matters that we know it

Poverty & economic growth.

The economies that are home to the poorest billions of people need to grow if we want global poverty to decline substantially

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 do poor people think about poverty?

More articles on poverty.

Three billion people cannot afford a healthy diet

Hannah Ritchie

Homelessness and poverty in rich countries

Esteban Ortiz-Ospina

Historical poverty reductions: more than a story about ‘free-market capitalism’

Interactive charts on poverty.

Official definitions of poverty in different countries are often not directly comparable due to the different ways poverty is measured. For example, countries account for the size of households in different ways in their poverty measures.

The poverty lines shown here are an approximation of national definitions, harmonized to allow for comparisons across countries. For all countries apart from the US, we take the harmonized poverty line calculated by Jolliffe et al. (2022). These lines are calculated as the international dollar figure which, in the World Bank’s Poverty and Inequality Platform (PIP) data, yields the same poverty rate as the officially reported rate using national definitions in a particular year (around 2017).

For the US, Jolliffe et al. (2022) use the OECD’s published poverty rate – which is measured against a relative poverty line of 50% of the median income. This yields a poverty line of $34.79 (measured using 2017 survey data). This however is not the official definition of poverty adopted in the US. We calculated an alternative harmonized figure for the US national poverty using the same method as Jolliffe et al. (2022), but based instead on the official 2019 poverty rate – as reported by the U.S. Census Bureau.

You can see in detail how we calculated this poverty line in this Google Colabs notebook .

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 .

Because there is no global survey of incomes, researchers need to rely on available national surveys. Such surveys are designed with cross-country comparability in mind, but because the surveys reflect the circumstances and priorities of individual countries at the time of the survey, there are some important differences. In collating this survey data the World Bank takes steps to harmonize it where possible, but comparability issues remain.

One important issue is that, whilst in most high-income countries the surveys capture people’s incomes, in poorer countries these surveys tend to capture people’s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving, or minus any borrowing or spending out of savings.

To help communicate the latter, the World Bank produces a variable that groups surveys within each individual country into more comparable ‘spells’ (which we include in our data download ). Our Data Explorer provides the option of viewing the data with these breaks in comparability indicated.

The international-$ is a hypothetical currency that results from price adjustments across time and place. It is defined as having the same purchasing power as one US-$ in a given base year – in this case 2017. One int.-$ buys the same quantity of goods and services no matter where or when it is spent. There are many challenges to making such adjustments and they are far from perfect. But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. Read more in our article From $1.90 to $2.15 a day: the updated International Poverty Line .

​​According to World Bank data, in 1990 there were 2.00 billion people living in poverty, and in 2019 that had fallen to 0.648 billion. The average fall over the 29 years in between is: (2.00 billion – 0.648 billion)/29 = 46.6 million. Dividing by the number of days (29 x 365) gives the average daily fall: (2.00 billion – 0.648 billion)/(29 x 365) = 128,000. (All figures rounded to 3 significant figures).

The projections are generally made on the assumption that incomes or expenditure grow in line with the growth rates observed in national accounts data. You can read more about the interpolation methods used by the World Bank in Chapter 5 of the Poverty and Inequality Platform Methodology Handbook.

We use the figures presented in the World Bank’s Poverty and Shared Prosperity 2022 report. Earlier estimates were also published in Lakner, C., Mahler, D.G., Negre, M. et al. How much does reducing inequality matter for global poverty?. J Econ Inequal (2022). https://doi.org/10.1007/s10888-021-09510-w . Available online here .

Earlier estimates were also published in Lakner, C., Mahler, D.G., Negre, M. et al. How much does reducing inequality matter for global poverty?. J Econ Inequal (2022). https://doi.org/10.1007/s10888-021-09510-w . Available online here .

The figures are taken from a World Bank blog post by Nishant Yonzan, Christoph Lakner and Daniel Gerszon Mahler. The post builds on and updates the estimates published by Lakner et al. (2022).In September 2022, the World Bank changed from using 2011 international-$ to 2017 international-$ in the measurement of global poverty. The International Poverty Line used by the World Bank and the UN to define extreme poverty was accordingly updated from $1.90 a day (in 2011 prices) to $2.15 (in 2017 prices).In order to match up to the projected figures, the extreme poverty estimates shown here relate to a previous release of the World Bank’s data using data expressed in 2011 prices, which vary slightly from the latest data in 2017 prices. You can read more about this change and how it affected the World Bank estimates of poverty in our article From $1.90 to $2.15 a day: the updated International Poverty Line .Lakner, C., Mahler, D.G., Negre, M. et al. How much does reducing inequality matter for global poverty?. J Econ Inequal (2022). https://doi.org/10.1007/s10888-021-09510-w . Available online here .

We use the figures provided in the blog post, which extend the methods presented in Lakner et al. (2022).Lakner, C., Mahler, D.G., Negre, M. et al. How much does reducing inequality matter for global poverty?. J Econ Inequal (2022). https://doi.org/10.1007/s10888-021-09510-w . Available online here .

Shown are those countries with a decline of more than 30 percentage points over a period of 15 years or more.There are a number of ways in which comparability across the different household surveys on which this data is based can be limited. These affect comparisons both across countries and within individual countries over time.The World Bank’s Poverty and Inequality Platform Methodology Handbook provides a good summary of the comparability and data quality issues affecting this data and how it tries to address them. In collating this survey data the World Bank takes a range of steps to harmonize it where possible, but comparability issues remain. To help communicate the latter, the World Bank produces a variable that groups surveys within each individual country into more comparable ‘spells’. Our Data Explorer provides the option of viewing the data with these breaks in comparability indicated.

You can read more about how the World Bank sets these higher poverty lines, as well as the International Poverty Line against which it measures extreme poverty, in our article From $1.90 to $2.15 a day: the updated International Poverty Line . To the three poverty lines adopted officially by the World Bank – $2.15, $3.65 and $6.85 – we add a higher line broadly consistent with definitions of poverty in high income countries. See our article 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?

For details of the methods used to produce the long-run poverty data see, Moatsos, M. (2021). Global extreme poverty: Present and past since 1820. In van Zanden, Rijpma, Malinowski and Mira d’Ercole (eds.) How Was Life? Volume II: New Perspectives on Well-Being and Global Inequality since 1820. Available from the OECD here .

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Measuring Poverty

The World Bank’s mission is to end extreme poverty and boost shared prosperity on a livable planet. To monitor progress and understand better ways to reduce poverty, it is important to measure poverty regularly.

The international poverty line is set at $2.15 per person per day using 2017 prices. This means that anyone living on less than $2.15 a day is in extreme poverty. About 701 million people globally were in this situation in 2019.

The COVID-19 pandemic dealt the biggest setback to global poverty-reduction efforts since 1990, increasing the number of people in extreme poverty by about 70 million, to 719 million people. Rising energy and food crises, caused in part by Russia’s invasion of Ukraine, and the effects of climate change contribute to an uneven recovery.

To better understand whether the world is on track to end extreme poverty, and how individual countries are faring, we must regularly measure progress. The World Bank works to measure and analyze poverty and share knowledge and methods for measuring poverty more accurately and frequently.

Through this work, we learn which poverty reduction strategies work, and which do not. By measuring poverty, we also help developing countries gauge program effectiveness and guide their development strategies in a rapidly changing economic environment.

Last Updated: Dec 14, 2023

Measuring poverty and communicating poverty reduction results are long-standing priorities for the World Bank. In 2015, we set up a Commission on Global Poverty to provide recommendations on how to measure and monitor global poverty more comprehensively. The Commission provided 21 recommendations. They included broadening the scope of measurements to include non-monetary measures, introducing a societal headcount measure of global poverty, and publishing a global profile of the poor.

The World Bank has committed to adopting most of these recommendations. In 2017, we introduced two complementary global poverty lines, which can be used as a benchmark for countries across the world whose level of development makes the International Poverty Line — $2.15 per day — not relevant. The $3.65 and $6.85 per person, per day poverty lines complement, not replace, the International Poverty Line.

In 2018, the World Bank report Piecing Together the Poverty Puzzle broadened the ways we define and measure poverty, by:

• Presenting a new measure of societal poverty, integrating the absolute concept of extreme poverty and a notion of relative poverty reflecting needs across countries.
• Introducing a multidimensional poverty measure that is anchored on household consumption and the International Poverty Line, but broadens the measure by including information on access to education and utilities.
• Investigating the differences in poverty within households, including by age and gender.

Twice a year, the World Bank Group produces Poverty and Equity Briefs that highlight poverty, shared prosperity, and inequality trends in each country. In September 2019, these briefs also began to report data on multidimensional poverty indicators and progressively increased coverage to 144 countries (which appear in the latest edition of our biennial Poverty and Shared Prosperity report ).

Household surveys are critical to measure and monitor poverty and equity. They provide comprehensive and representative data on living conditions, help identify vulnerable groups, allow for poverty and equity estimation, and enable the analysis of poverty dynamics and policy impacts.

In 2020, the COVID-19 pandemic posed a new challenge to measuring its devastating impacts, particularly on the poor and vulnerable. Surveys based on face-to-face interviews were hindered by social distancing protocols and limitations on mobility. Policy makers needed timely and relevant information on the impacts of the crisis as well as the effectiveness of their policy measures to save lives and support livelihoods. The World Bank helped implement phone surveys to monitor the impacts of COVID-19 on people in 89 countries across all developing regions.

 Household surveys are also a foundational requirement for leveraging the data revolution. Their data is a required input to test and train the use of big data and AI for real-time poverty monitoring to inform decision making during times of uncertainty and crisis. Because of their importance, the World Bank provides technical assistance ( Last year, the World Bank supported 75 countries with this effort, including 50 IDA countries.

On monitoring project impacts, the Bank Group has two main tools to improve and measure results in real-time:  Survey of Well-being via Instant Frequent Tracking (SWIFT)  and  Iterative Beneficiary Monitoring (IBM) . These tools rely on mobile technology and big and small data to produce information on specific project results and on consumption/income of project beneficiaries. IBM is currently mainstreamed in [more than 40] operations. SWIFT plays an important role in linking poverty and sector-specific indicators through affordable data collection and analysis.

Together with our country clients, we are now developing and testing high-frequency survey methods that rely on mobile technology or prediction methods. Working with national statistical offices and non-governmental organizations, our Listening to Africa initiative is piloting the use of mobile phones to regularly collect information on living conditions in [six] African countries.

Official global, regional, and country poverty results are based on data that the World Bank compiles and disseminates through our  Poverty and Inequality Platform .

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Societal Poverty: A global measure of relative poverty

It is estimated that 731 million people live in extreme poverty – this is based on household survey data which indicates that their daily consumption is less than the international poverty line (IPL), currently valued at $1.90 in 2011 purchasing power parity (PPP) US dollars. Why $1.90 per day? And, is that really enough to live a life free of extreme poverty?

One part of the answer to these questions involves examining how the IPL was initially constructed. The value of the IPL is derived from national poverty lines – lines which reflect social and economic assessments made in each country of how much someone needs in order to meet their basic needs and live a life free of poverty. The $1.90 value is an average of national poverty lines from 15 very poor countries. The inference is that if $1.90 defines the cost of basic needs in some of the poorest countries of the world then certainly someone living on less than this must be viewed as poor regardless of where they live.

In 1990, when the decision was made to base the IPL on national poverty lines from the poorest countries of the world, 60 percent of the global population lived in low-income countries. An average value of national poverty lines from low-income countries was very meaningful for a large portion of the global population. But as the world has grown richer, less than 10 percent of the global population now live in low-income countries (Fantom and Serajuddin, 2016). Because the vast majority of the total population of the world and the majority of global poor now live in middle- and high-income countries, it is reasonable to ask if the yardstick for measuring poverty should be the same for all countries of the world. Or, in other words, is $1.90 a relevant standard for measuring poverty in richer countries? It is clearly the case that countries define basic needs differently.

The figure above plots national poverty lines by economic development. The pattern is clear. As countries get richer, their assessment of basic needs increases in value. Fixing basic needs to be the same across all countries ensures equality in the bundle of goods across countries, and this is one important way of counting the poor across countries. But, equality of the consumption bundle across countries may not result in the same level of wellbeing. Basic functioning may be costlier in some countries relative to other countries, and fixing consumption to be constant could well mean an unequal treatment of people across the world in terms of their wellbeing.

One way to think about this is to say that a poverty line that keeps functioning the same across countries may result in a poverty line with varying levels of consumption. For example, participating in the labor market may be viewed as a minimal social functioning; the cost of this functioning may require only clothing and food in a poor society, while in a richer society it may require access to transportation, communication such as internet or cell phone, in addition to clothing and food.

To address this concern, the World Bank has introduced a new set of poverty lines that are tailored to the specific level of economic development of each country and are designed to measure “societal poverty”. First, the societal poverty line is never less than the IPL of $1.90. If someone suffers from extreme poverty, then they also suffer from societal poverty. But, this new measure also defines someone as suffering from societal poverty if they live on less than $1 plus half of what the median person in their country consumes. As countries get richer and median consumption levels increase, the societal poverty line (SPL) increases in value. For example, in a country where the median level of consumption per person is $3.00 per day, the SPL is $2.50, ($1 + 0.5*$3.00).

This relationship between the SPL and the median consumption level within the country is based on observing how countries increase the value of their national poverty line as they get richer. The SPL essentially reflects typical assessments of basic needs for countries at different levels of economic development. It is a poverty line that is as relevant for very rich countries as for very poor countries.

Using this standard, the estimated societal poverty headcount is approximately 2.1 billion people in 2015. This count is almost three times more than the global count of people living on less than $1.90 per day (estimated at approximately 731 million in 2015). The charts above display the change over time in both the count and the rate of societal poverty, as measured by the SPL; and similarly displays the count and rate of absolute extreme poverty as measured by the IPL of $1.90 per day. The first striking aspect is that while the total count of people living in extreme poverty has declined rapidly, the number of people who are identified as societally poor has largely stayed the same over the last 35 years.

In contrast, the percentage of the global population that are societally poor has fallen steadily since 1990, but still at a much slower rate than the decline of extreme poverty. This divergence in the rate of decline amplifies the distinction between the two measures. In 1990, societal poverty was estimated to be about 8 percentage points more than the extreme poverty rate; by 2015, the gap in terms of percentage point difference more than doubled in size.

In a growing global economy, this divergence is an expected outcome, and the magnitude of the change (in the difference of the rates) over the decades highlights the distinction in the informational content in both measures. In the early 1980s the societal poverty rate and extreme poverty rate were largely similar concepts since most of the world lived in countries with low median national consumption where the IPL and SPL are either identical or very close in the value. They largely portrayed the same picture of poverty. But, now as very few countries have high rates of extreme poverty, the SPL is capturing significantly more information about the distributional aspects of growth and who is poor when assessed by standards in accord with the economic development of their country.

Fantom, Neil James; Serajuddin, Umar. 2016. The World Bank's classification of countries by income . Policy Research working paper; no. WPS 7528. Washington, D.C. : World Bank Group.

Jolliffe, Dean and Prydz, Espen Beer. 2017. Societal poverty : a relative and relevant measure . Policy Research working paper; no. WPS 8073, Washington, D.C. : World Bank Group. Forthcoming in World Bank Economic Review; partial funding from the Knowledge for Change Program (KCP) and the UK Department for International Development (“Measuring Poverty and Shared Prosperity in a Changing World”) is gratefully acknowledged.

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American Poverty Should Be Measured Relative to the Prevailing Standards of Our Time

This report argues that American poverty should be measured relatively to our society’s prevailing standards. The article shows why relative measures of poverty are superior to their alternatives, and especially those called “absolute” measures. It makes this case based on extensive international research, theoretical arguments, and concrete examples. By advocating for a relative measure, I encourage the United States to follow the approach used by the European Union, many other international organizations like the Luxembourg Income Study (LIS), and by the overwhelming majority of international poverty researchers. 1

The report has the following sections. First, I provide a clear and simple definition of poverty as a shortage of resources compared to needs. Second, I contend that resources and needs must be defined within the social context of a time and place. Third, I explain that relative measures define poverty according to the prevailing standards of a time and place. Fourth, I show how relative measures better fit leading theoretical definitions of poverty. Fifth, I review evidence showing that relative measures of poverty are more strongly associated with health, well-being, and life chances.

Before proceeding, please let me define some key terms. A relative measure is calculated compared to the current distribution of resources and needs. Typically, a relative measure is calculated relative to the median income. The most popular and conventional relative measure is to say a person is poor if their income is below 50 percent of the median. 2 Using that measure and the LIS , a family of three would be poor if their income was below about $34,000 in the United States in 2018 (after incorporating all taxes, tax credits, and welfare transfers). 3 An absolute measure is calculated based on a timeless or uniform set of needs. For instance, one could calculate an absolute measure based on the cost of a basket of necessities like food and shelter. According to the U.S. official poverty measure (OPM)—which is considered an absolute measure—a family of three would be poor if their pretax cash income was below about $20,780 in the United States in 2018. 4

In the process of making the case for relative measures of poverty, it should be clear this piece strongly advocates against the OPM. The OPM is irredeemably flawed, unreliable, and deeply problematic. It was devised in the 1960s based on an estimate of an emergency food budget in the 1950s, and has not been updated to reflect subsequent dramatic changes in a family’s needs. Most poverty researchers agree the OPM sets the poverty line far too low. Shawn Fremstad’s recent piece in this series of TCF reports on poverty, “The Defining Down of Economic Deprivation,” thoroughly and unequivocally critiques the OPM. 5 Therefore, I will not reiterate the many reasons we should abandon the OPM and why the OPM should not be taken seriously in social science or public policy. Rather, this piece’s critique of the OPM is largely implicit, as it is clear that relative measures are theoretically and conceptually superior to any absolute measure like the OPM.

I. Poverty Is a Shortage of Resources Compared to Needs

The simplest and clearest definition of poverty is a shortage of resources compared to needs . 6 For instance, one might lack enough of the resource of money to meet the need of paying rent. Another way of saying this is to say one’s resources fall below a threshold, the line under which you cannot meet your needs (sometimes referred to as a “standard of needs”). To escape poverty means one’s resources have risen above that threshold. For example, many critique the OPM because even at (or above) the threshold, most families cannot meet their needs . 7

Poverty is a shortage of resources, and a shortage of resources usually triggers low well-being. Yet, some people have low well-being without being poor and some are poor without low well-being.

There is a difference between well-being and poverty, as economist and philosopher Amartya Sen persuasively explains. Poverty is a shortage of resources, and a shortage of resources usually triggers low well-being. Yet, some people have low well-being without being poor and some are poor without low well-being. 8 Well-being may include health, life satisfaction, food security, and access to decent health care, for example, or a neighborhood with minimal pollution. As Sen explains, “Poverty is not a matter of low well-being, but of the inability to pursue well-being precisely because of the lack of economic means.” 9 Purchasing well-being is a need, and money is a resource that enables this purchase. Hence, poverty usually undermines well-being, and this is why we care about poverty. But a lack of resources to meet needs is not well-being per se.

II. Resources and Needs Must Be Defined within the Social Context of a Time and Place

If poverty is a shortage of resources compared to needs, we first must clarify the definition of resources. Most agree resources should be defined as comprehensively as possible. A common definition of resources is current income adjusted for taxes and including transfers and tax credits . 10 This measure of income is often called “post-fisc” or “disposable” income. The measure embraces the reality that people live and are only able to consume in a “net” post-tax income world. Welfare transfers and tax credits clearly have real value to people. Income is also a positional good: it defines where one stands in society. We use income to compete with other people, who are also aiming to meet their needs. Income confers status in communities and society, and status is always relative to that of others. Thus, the value of income itself is inherently relative (as opposed to absolute). Indeed, any resource’s value is always relative.

The definition of needs also requires clarification. While resources are inherently relative, some might argue that needs are absolute across time and place. Often, there is a perception that there is a list of essential necessities that we can both identify and agree on. But the social science literature has not been able to reach a consensus on an objectively defined set of needs. 11 Many assume that the U.S. official poverty measure is based on a scientific and objective standard of needs. This is simply not true . 12 Almost always, poverty measures are not linked to anything like physiological or caloric requirements, or any objective budget of basic necessities. The main reason is because doing this is much harder than one might anticipate. As Patricia Ruggles shows, consumption patterns changed so dramatically from the 1950s to the 1990s that agreeing on the basic needs of American families is quite difficult. 13

I am not saying that we cannot agree that a desperate level of deprivation does exist. There is surely a threshold of extreme deprivation under which we would all agree families are definitely poor. People are certainly poor if they are homeless or starving, or cannot access clean water. The problem is that it is practically impossible to define a valid and reliable standard of needs above such desperate levels of deprivation. Such a minimal standard sets the line so low that only a very small share of the population would be poor in the United States or any other wealthy nation. 14 The moment one tries to define needs above such minimal subsistence levels, it quickly becomes clear that any definition of absolute needs will be questionable.

Think for a moment about how difficult it would be to define all necessities across any geographically large place over any reasonable period of time. Needs might include housing, food, water, and protection from extreme cold. But what quality of housing is considered sufficient to meet one’s needs? Exactly how much food is necessary across a population with varying heights, weights, health conditions, and ages? And necessary for what—just survival, or growth and thriving? Aldi Hagenaars points out that even nutritionists cannot agree about levels of calories needed for all the various ages, sexes, occupations, and living conditions. 15 Does the need for water include bathing needs, and if so, how often per week? And, if we agree people should be able to avoid extreme cold, should they also be able to avoid extreme heat? If people are old or have certain health conditions, air conditioning might be an essential need. But if it is, how old and how ill must they be for air conditioning to be actually essential?

It doesn’t take much imagination to think up several other needs, such as transportation and communication. Are cars essential? What if mass transportation is available and cheap, do cars then become non-essential? How about a phone, and if a phone is essential, should that be a smart phone with internet access? And, what about health care or child care? If those are needs, how much is necessary, and at what quality? How old must the children be before child care stops being a need, and should the age cutoff vary depending on the safety in the neighborhood? What if it is culturally normative that grandparents live with adult children and grandchildren: should one then argue that child care outside the family is not a need?

The debate becomes endless and almost existential. If one is sad that a neighbor has a nicer car, that probably is not sufficient deprivation to make a fine car a need. But at what exact point is one’s housing sufficiently deprived to trigger enough suffering such that it rises to the level of an essential need? Precisely how many increments of health would have to be worse in order for housing to be insufficiently meeting one’s needs? In short, we cannot clearly differentiate between various views of what needs are truly essential. Worse, it is never possible to quantify all these needs and come up with a threshold that fits all the heterogeneities and diversities of modern societies.

We cannot clearly differentiate between various views of what needs are truly essential. Worse, it is never possible to quantify all these needs and come up with a threshold that fits all the heterogeneities and diversities of modern societies.

Working through these sorts of decisions makes clear that the definition of needs is overwhelmed by uncertainty. For exactly this reason, the vast majority of international poverty researchers have become skeptical of absolute measures of poverty. As Hagenaars contends, “the resulting estimates are not as absolute and objective as they are claimed to be.” 16 Similarly, Peter Townsend concludes, “Any rigorous conceptualization of the social determination of need dissolves the idea of ‘absolute’ need.” 17 As Lee Rainwater and Timothy Smeeding explain, “The more experience countries have with absolute poverty definitions, the more obvious becomes the absurdity of the rationale for them.” 18 Therefore, lists of basic needs that should be applied across all cultural and historical contexts have failed to stand up to scrutiny.

Recall that the definition of poverty is a shortage of resources compared to needs. Therefore, despite all these uncertainties, we still need to move forward and come up with a usable definition of needs. The consensus solution is that we must define needs within each geographic, historical, and cultural context. Obviously, this is true in terms of the cost of living. 19 As an extreme example in the United States, housing costs vary dramatically between rural areas in the Midwest and cities on the coasts. To meet the need of housing, ideally the threshold would be higher in Santa Monica, California than Sioux Falls, South Dakota. As a society experiences economic development or an upswing in the business cycle, the costs of needs tend to rise.

The very meaning of what counts as a need is always defined within a place and time. Rather than an absolute list of physiological and caloric necessities that transcends time and place, needs become “needs” as a society or community evolves.

Even more generally, the very meaning of what counts as a need is always defined within a place and time. Rather than an absolute list of physiological and caloric necessities that transcends time and place, needs become “needs” as a society or community evolves. Given such a realistic acknowledgement that one’s cultural and historical context shapes what we view as a need, it becomes clear why poverty should be defined relatively.

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Iii. relative measures define poverty according to the prevailing standards of a time and place.

A relative measure defines poverty as a shortage of resources relative to needs defined by the prevailing standards of a time and place. 20 The prevailing standards of the time and geographical place thus give us a useful definition of needs. 21 Hence, relative measures can assess whether people have fallen far below the living conditions and customary standards of the majority of the contemporary society or community in which they reside.

This definition of poverty is not arbitrary. Well-designed relative measures acknowledge there is always going to be some uncertainty about where to precisely draw the threshold (e.g. some advocate for 40 percent of the median rather than 50 percent). But a key advantage of relative measures is they make that uncertainty transparent, and this in turn makes the threshold more concrete. Indeed, the average person naturally thinks of their social context when they define poverty. When asked in a survey how to define poverty, most people come up with a poverty threshold that is roughly equal to the relative threshold of 50 percent of the median income. 22 Further, the average person’s definition of “necessities” tends to rise as living standards rise. 23

In the classic The Other America, Michael Harrington compellingly illustrates how the meaning of poverty must be contextualized relative to the living standards of the mainstream of contemporary society:

Shall we say to them [the American poor] that they are better off than the Indian poor, the Italian poor, the Russian poor?. . .In the nineteenth century, conservatives in England used to argue against reform on the grounds that the British worker of the time had a longer life expectancy than a medieval nobleman. This is to say that a definition of poverty is, to a considerable extent, a historically conditioned matter. Indeed, if one wanted to play with figures, it would be possible to prove that there are no poor people in the United States, or at least only a few whose plight is as desperate as that of the masses in Hong Kong. There is starvation in American society, but it is not a pervasive social problem as it is in some of the newly independent nations. There are still Americans who literally die in the streets, but their numbers are comparatively small. . .Those who suffer levels of life below those that are possible, even though they live better than the medieval knights or Asian peasants, are poor. . .The American poor are not poor in Hong Kong or in the sixteenth century; they are poor here and now, in the United States. They are dispossessed in terms of what the rest of the nation enjoys. . .To have one bowl of rice in a society where all other people have half a bowl may well be a sign of achievement and intelligence; it may spur a person to act and to fulfill his human potential. To have five bowls of rice in a society where the majority have a decent, balanced diet is a tragedy. 24

Similarly, the equally influential scholar, Peter Townsend, eloquently elaborates:

Poverty is a dynamic, not a static concept. Man is not a Robinson Crusoe living on a desert island. He is a social animal entangled in a web of relationships at work and in family and community which exert complex and changing pressures to which he must respond, as much in his consumption of goods and services as in any other aspect of this behavior. . .Our general theory, then, should be that individuals and families whose resources over time fall seriously short of the resources commanded by the average individual or family in the community in which they live. . .are in poverty. 25

Hence, poverty is a matter of falling behind the prevailing standards of one’s contemporary society.

While relative measures define poverty contextually within one’s time and place, some nevertheless advocate for absolute measures defining poverty independent of any time or place. These absolute measures break sharply with the relative approach. Above, I mentioned that such absolute measures have never been based on some objective list of physiological necessities. Such absolute measures tend to result in obviously problematic thresholds.

The most prominent recent example of this is Bruce Meyer and James Sullivan’s consumption-based absolute measure of poverty. 26 In collaboration with the Trump administration’s Council of Economic Advisers and the American Enterprise Institute, they define poverty based on the living standards of the poor in 1980 . Applying that standard to recent years, Meyer and Sullivan claim that less than 3 percent of Americans were poor in 2018. They claim they find such low poverty rates because their methods: (a) more comprehensively incorporate taxes and transfers, (b) advantageously use a consumption-based absolute measure, and (c) better adjust for inflation. To be clear, the international poverty literature has already agreed for decades to comprehensively incorporate taxes and transfers. Also, it is perfectly reasonable to consider consumption-based measures or alternative inflation adjustments. One could even go beyond Meyer and Sullivan and actually measure material deprivations like hunger instead of merely on consumption spending. 27

However, all of this distracts from what really drives their low, 3-percent poverty rate. The reason they find so little poverty is because they set the threshold absurdly low to begin with. Meyer and Sullivan define a family of four in 2018 in the United States as NOT poor if they consume more than $12,935. 28 They arrive at this threshold by starting with the fact that the OPM poverty rate in 1980 was 13 percent. They then move over to consumption data, and find the dollar amount that corresponds to the bottom 13 percent in consumption spending in 1980, which was $5,982. They then adjust that dollar amount of $5,982 for inflation forward to 2018. This is how they come up with the threshold of $12,935 in 2018. They then say if a family in 2018 spends more than $12,935 in 2018, they are not poor. Recall that poverty scholars agree the OPM threshold is far too low. Yet, at $25,100, the OPM threshold for a family of four in 2018 was almost twice as high as Meyer and Sullivan’s threshold. Thus, there really is no justification for Meyer and Sullivan’s threshold . 29

Meyer and Sullivan thus define resources and needs and set the threshold in a way that is radically detached from the United States in 2018. Rather than the prevailing standards of today, they simply assert that the definition of needs was set thirty-eight years earlier. They have no basis for why the threshold should be based on what the bottom thirteenth percentile consumed in 1980. The fact that the threshold lacks face validity and is so absurdly low demonstrates precisely why it is preferable to define resources and needs within a time and place.

IV. Relative Measures Better Fit the Leading Theoretical Definitions of Poverty

Any concrete social science measure should be based on a theoretically rigorous definition of the concept to which it pertains, and measures of poverty should be no exception. One reason that relative measures are preferred is that they better fit leading theoretical definitions of poverty. This can be demonstrated by reviewing how several classical theorists define poverty. Then, I will discuss two of the leading contemporary theoretical definitions of poverty: social exclusion and capability deprivation.

Most recent debates about ethics and political philosophy have been influenced by political scientist John Rawls and especially his highly regarded Theory of Justice . 30 In his well-known “difference principle,” Rawls proposes that societies should be judged by how the society treats the “least advantaged” or “least fortunate group in society.” 31 Rawls was concerned that the least advantaged should be “drawn into the public world and see themselves as full members of it.” 32 Rawls clarifies that the difference principle is a matter of relative, not absolute, deprivation, writing that it implies a “ social minimum [that] depends on the content of the public political culture .” 33 Quite consistent with relative poverty measures, Rawls claims that society could define the “least fortunate group” as those with less than half of the median income and wealth. Rawls says this could form a meaningful poverty standard. 34 This social minimum “is not given by the basic needs of human nature taken psychologically (or biologically) apart from any particular social world.” 35 Throughout his writings, Rawls is concerned with equal citizenship and how it is threatened by inferiority and deference, inequalities, and social status. 36

Preceding Rawls, one can find justifications of relative measures in classical economists. In The Constitution of Liberty , the neo-classical conservative Friedrich Hayek concedes, “Poverty has, in consequence, become a relative, rather than an absolute concept. . .Most of what we strive for are things we want because others already have them.” 37 Much earlier than Hayek, in The Wealth of Nations , Adam Smith defines poverty relatively:

Whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though they had no linen. But in present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, no body can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them. . .In France, they are necessaries neither to men nor to women. . .Under necessaries therefore, I comprehend, not only those things which nature, but those things which the established rules of decency have rendered necessary to the lowest rank of people. 38

In a careful study of Smith’s writings, Geoffrey Gilbert explains that Smith defined poverty relatively and that basic necessities matter mostly for status and esteem in one’s community. 39 Gilbert highlights that Smith characterizes poverty in terms of psychic pain, social isolation, and social inferiority: “Thus poverty, as addressed by Smith in 1759, did not subject the individual to hunger, malnutrition, disease, lack of clothing or shelter; rather, it shamed him through a pained awareness of his inferior position in the social scale.” 40

Turning to contemporary theoretical definitions, “social exclusion” has been a useful concept for defining poverty. In a masterful review, Hilary Silver explains that social exclusion is essentially the opposite of solidarity. 41 Social exclusion means marginalization and isolation from one’s community. Others characterize social exclusion as “the multi-dimensional character of disadvantage and exclusion in modern market economies;” 42 multiple deprivation or “cumulative misery;” 43 those “who suffer from an accumulation of disadvantage which cannot be reached by macro-policies;” 44 and, those difficult to reach with social policy. 45 Anthony Atkinson exemplifies social exclusion as lacking a telephone in the home: “A person unable to afford a telephone finds it difficult to participate in a society where the majority have telephones.” 46 Today we might think of access to the Internet. In sum, social exclusion means incomplete or disadvantaged access to the status, benefits, and experiences of typical citizens in society. 47

Social exclusion unites many of the implicit definitions of poverty conveyed by poverty scholars. Social exclusion echoes Harrington’s concern that “the poor are losing their links with the greater world.” 48 Atkinson explains that Rawls’s least fortunate were disadvantaged in ways very compatible with social exclusion: disconnected from mainstream society and unable to participate as normal citizens. 49 In addition, social exclusion is consistent with William Julius Wilson’s concept of “social dislocation,” which he describes as limited differential opportunities for economic resources, political privileges, organizational influence, and cultural experiences. 50 Similarly, in his classic The Affluent Society , John Kenneth Galbraith defines poverty as when people’s income “falls radically behind that of the community.” Galbraith emphasizes that poverty involves more than simply having enough to physically survive, and is better understood as lacking what the “community regards as the minimum necessary for decency.” 51

The concept of social exclusion has been pivotal to European measurement and debates about poverty. In 1984, when the European Commission constructed measures of poverty, the Council of Ministers explicitly linked their measures to social exclusion by defining poverty as “persons whose resources are so limited to exclude them from the minimum acceptable way of life in the Member State in which they live.” 52 Ever since, and because of this definition, the European Union has monitored member countries for the share of each country’s population “at risk of poverty,” which they define as below 60 percent of the median income. 53

Beyond social exclusion, and building on the pioneering work of Sen and Martha Nussbaum, many define poverty with the concept of “capability deprivation.” 54 Nussbaum describes capabilities as, “what people are actually able to do and to be.” 55 Rod Hick and Tania Burchardt clarify that capability refers to the ability or capacity to function effectively in society. 56 Sen’s definition of poverty focuses on the poor’s lack of substantive freedom of choice to achieve valuable “functionings” and the capability to acquire well-being. 57 In turn, a functioning member of society must have basic freedoms to participate fully and equally in the mainstream of society. 58 The concept of capability also links to Rawls’s argument that basic liberties should be prioritized in a society. 59 A society that deprives people of basic liberties can be understood as depriving those people of capability.

Recall that Sen drew a distinction between resources and well-being. He explained that poverty is a shortage of resources to purchase well-being. Because capabilities are the freedom or capacity to pursue one’s well-being, capabilities conceptually sit between resources and well-being. This builds in an intermediate step into the definition of poverty. Some people might have limited capabilities, for example, because of a health condition. Therefore, such people would need greater resources to “convert” their resources into well-being. 60 Thus, resources are instruments that need to be converted to enable the capabilities that secure one’s well-being. Despite this added complexity, this approach has productively forced some governments to come up with lists of capabilities that would be (a) compromised by insufficient resources, and (b) are essential for well-being. 61

Finally, Atkinson integrates both concepts of social exclusion and capability deprivation by explaining that poverty involves, “people being prevented from participation in the normal activities of the society in which they live or being incapable of functioning.” 62 Returning to poverty as a shortage of resources compared to needs, it is helpful to think of capabilities and social inclusion as important needs. This also recognizes how one is poor relative to one’s context and community. Lacking sufficient economic resources compared to others in one’s society results in one suffering from social exclusion and capability deprivation.

V: Relative Poverty Is More Consequential to Health, Well-Being, and Life Chances

If relative measures are superior, they should better distinguish between who is actually deprived and who is not. As I explained earlier, we care about poverty because it produces harm and undermines well-being. Hence, the better poverty measure is the one that is more strongly associated with vital outcomes like health and other aspects of well-being. While there is still a need for further research, the preponderance of extant research strongly shows that a relative measure better predicts and differentiates health, well-being, and life chances.

In the mid-1990s, the National Research Council (NRC), which is the research arm of the National Academy of Sciences, conducted a scientific review of the OPM. As part of that review, they proposed a relative measure of poverty that was a proportion of prevailing levels of consumption. With a few modifications, the proposed measure is similar to what became the Supplemental Poverty Measure (SPM) . 63 A few studies have analyzed how well the NRC’s proposed relative measure (like the SPM) predicts outcomes compared to the OPM. For instance, Carolyn Hill and Robert Michael demonstrate that the NRC’s measure is more strongly associated with a variety of children’s outcomes: school grades and suspensions, achievement test scores, expectations of completing college, and avoiding pregnancy. 64

In a related literature, health scholars assess if relative or absolute income is more strongly associated with health outcomes. 65 One conclusion of this literature is that absolute deprivation only matters up to a point. Once countries are developed, relative rather than absolute deprivation becomes most salient to well-being. For instance, Malavika Subramanyam and colleagues use the U.S. Current Population Surveys and find that beyond absolute income, individual relative deprivation in income and position in the income hierarchy are associated with poor health . 66 A few demonstrate that subjective perceptions of relative deprivation undermine health. 67 Several show that inequality or relative poverty matter to health and well-being aside from a country’s level of economic development or level of poverty. 68 Scholars have also shown that even though having a higher personal income is beneficial, health and well-being are still undermined by residing in a community with a higher mean income. 69 Thus, one’s relative standing within one’s local context matters to one’s health beyond one’s own absolute income.

In a recent working paper, this author and colleagues provide a novel, rigorous test of the comparative effects of relative and absolute income for health and well-being. 70 In particular, we uniquely exploit variation over time within individuals to assess how well absolute and relative income respectively are associated with the following: self-rated health, self-rated poor health, psychological distress, high psychological distress, and life satisfaction. Using the Panel Study of Income Dynamics, which is the longest running nationally representative dataset following people over time, enables us to examine individuals over a fairly long period while adjusting for age and time period differences. Our results unequivocally show that relative income is more important than absolute income to health and well-being. We find that relative income is significantly associated with all five outcomes, while absolute income is only significantly associated with self-rated health and poor health. Furthermore, relative income has substantially larger effects than absolute income for all outcomes.

In sharp contrast with the research demonstrating how relative measures better predict well-being, there has been remarkably little evidence that absolute measures are superior. Instead of actually supplying empirical evidence that absolute measures better differentiate between poor and non-poor, proponents of absolute measures tend to merely assert, without evidence, that their measures are better. For instance, Meyer and Sullivan simply claim that consumption is “well-being,” and then declare there is little poverty because low-income families consume more than in the past. Again, it needs to be stressed that one can certainly use consumption as the measure of resources and still use a relative measure of poverty. Indeed, the SPM is a relative measure because the threshold is based mostly on the bottom 33 percent of consumption expenditures. Again, one major problem is that Meyer and Sullivan’s particular consumption-based measures are based on absurdly low absolute thresholds.

As mentioned above, Meyer and Sullivan find less than 3 percent of Americans are poor because they define a family of four as not poor if they consume at or above $12,935 in 2018. However, they never provide any evidence that this particularly low absolute threshold demarcates who has sufficient resources to purchase well-being. 71 In other words, Meyer and Sullivan never empirically compare their measure against a relative measure, and show their measure is more associated with health, well-being, and life chances. Indeed, they never even engage the literature described above that shows that relative measures are more strongly associated with those outcomes.

It should also be noted that if one is really concerned with measuring absolute deprivation, there is a far more productive approach in Europe that examines material deprivation. 72 This approach actually measures concrete indicators of being unable to “consume” what one needs—such as hunger or insufficient living conditions—and is likely to be far more useful than focusing on consumption spending. 73 Ultimately, advocates of absolute measures have never provided evidence that absolute measures are superior to relative measures.

This report contends that relative measures of poverty are superior to alternatives. Relative measures are anchored in the here and now of one’s time and place rather than some distant past such as the 1960s. Extensive literature on poverty measurement, the overwhelming majority of international poverty researchers, and most international organizations support relative measures over the alternatives. This report reviews and catalogues the many and varied justifications for relative measures. In the process, it critiques absolute measures and endorses abandoning the OPM. The report aims to provide a clear set of arguments, hopefully without too much academic jargon, for why one should prefer a relative measure of poverty.

This essay makes its case across five sections that each cover a major theme in building the argument for relative measures. First, I provide a clear and simple definition of poverty as a shortage of resources compared to needs. Second, I contend that resources and needs must be defined within the social context of a time and place. Third, I explain that relative measures define poverty according to the prevailing standards of a time and place. Fourth, I show how relative measures better fit leading theoretical definitions of poverty. Fifth, I review evidence showing that relative measures of poverty are more strongly associated with health, well-being and life chances.

Public policy, as well as the social sciences, would benefit from further objective tests of whether absolute or relative measures better predict health, well-being, and life chances. Advocates of absolute measures often simply assert their measures are superior without presenting empirical evidence that vindicates absolute measures versus relative measures. This is puzzling, considering that existing objective evidence strongly favors relative measures. Hence, beyond offering a theoretical justification and arguments for relative measures, hopefully this piece can encourage subsequent research that objectively adjudicates between relative and absolute measures. Unless such objective tests show convincingly otherwise, the most important conclusion is that existing social science evidence and theoretical arguments strongly favors relative measures over alternatives. Poverty in America should be measured relatively.

• David Brady and Linda M. Burton, The Oxford Handbook of the Social Science of Poverty (New York: Oxford University Press, 2016); Luxembourg Income Study (LIS) Database, http://www.lisdatacenter.org (United States 2018; key figures consulted March 8, 2021).
• David Brady and Linda M. Burton, The Oxford Handbook of the Social Science of Poverty (New York: Oxford University Press, 2016).
• Luxembourg Income Study (LIS) Database, http://www.lisdatacenter.org (United States 2018; key figures consulted March 8, 2021). For comparison, a single mother making $15 per hour for forty hours in a week and fifty weeks in a year would make $30,000.
• Sort of in between relative and absolute measures are what is called “anchored” measures. An anchored measure defines relative poverty in a given year and then updates for subsequent years with inflation alone. See Timothy Smeeding, “Poverty Measurement,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford: Oxford University Press, 2016).
• Shawn Fremstad, “The Defining Down of Economic Deprivation: Why We Need to Reset the Poverty Line,” Bernard L. Schwartz Rediscovering Government Initiative, Bernard L. Schwartz Rediscovering Government Initiative, 2020, https://tcf.org/content/report/defining-economic-deprivation-need-reset-poverty-line/ .
• Timothy Smeeding, “Poverty Measurement,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford: Oxford University Press, 2016).
• Amartya Sen, Inequality Reexamined (Cambridge, MA: Harvard University Press, 1992); Amartya Sen, Development as Freedom (New York: Anchor Books, 1999).
• Amartya Sen, Inequality Reexamined (Cambridge, MA: Harvard University Press, 1992), 110.
• Current income has many valuable attributes as a measure of resources. Among other reasons, current income (including taxes and transfers and adjusting for household size) proxies long-term economic resources far better than do alternative measures of current resources; see David Brady, Marco Giesselmann, Ulrich Kohler, and Anke Radenacker, “How to Measure and Proxy Permanent Income: Evidence from Germany and the U.S.,” Journal of Economic Inequality , volume 16, 2018, 321–345, https://doi.org/10.1007/s10888-017-9363-9 . Most poverty researchers prefer income, while some prefer assets or assets plus income. The OPM focuses only on cash income, whereas international researchers agree that income should also include “near cash” transfers like SNAP and tax credits like the EITC. Ideally, one would find a way to monetize and assess the value of any resource a household has at its disposal. For instance, imagine a family has a grandmother living with them and the grandmother provides free child care. That free labor is a resource, and that family would have more resources than a family with the same income and without the free labor. Hence, accurately counting the family’s resources would mean we were able to monetize and calculate the value of all resources. As this example illustrates, however, any measure of resources can only approximate the true resources a family has at its disposal. Because any measure of resources is imperfect, we strive for a measure of resources that is as comprehensive as possible.
• Poverty researchers have not found a consensus on an objective list, but it should be noted that typical people can get closer to coming up with a workable list. For instance, in the United Kingdom, some have advocated for a minimum income standard (e.g. https://www.jrf.org.uk/report/minimum-income-standard-uk-2020 ). Notably, such minimum income standards would put the poverty threshold far higher than that set by the OPM in the United States.
• Despite popular impressions, the standard of needs underlying the OPM does not actually have a scientific basis. See David Brady, Rich Democracies, Poor People (New York: Oxford University Press, 2009); Shawn Fremstad, “The Defining Down of Economic Deprivation: Why We Need to Reset the Poverty Line,” Bernard L. Schwartz Rediscovering Government Initiative, Bernard L. Schwartz Rediscovering Government Initiative, 2020, https://tcf.org/content/report/defining-economic-deprivation-need-reset-poverty-line/ ; Michael B. Katz, The Undeserving Poor (New York: Pantheon, 1989); and Alice O’Connor, Poverty Knowledge (Princeton, NJ: Princeton University Press, 2001). There was never a strong justification for multiplying food times three. Using data from the mid-1950s, there was evidence that food amounted to roughly one-third of expenses for typical households on average. The evidence was not clear that this applied to low-income households. Further, the Johnson administration ended up using the “economy food plan,” which was about 25 percent below the “low-cost food budget” used by Orshansky; seeMichael B. Katz, The Undeserving Poor (New York: Pantheon, 1989). The economy food plan was meant for emergencies and on a temporary basis. Also, the food budgets were not subsequently revised. A few years later, the government began updating the OPM thresholds using the consumer price index rather than calibrating the thresholds according to changing food budgets. This had the consequence of severing any tie to the food budget as a standard of needs. Indeed, Katz quotes Orshansky as writing: “This meant, of course, that the food–income relationship which was the basis for the original poverty measure no longer was the current rationale;” see Michael B. Katz, The Undeserving Poor (New York: Pantheon, 1989), 116. Moreover, as is well known, food is certainly much less than one-third of household expenses today. As a result, the OPM effectively ignores the costs of important household needs like child care and health care, which were less essential or much cheaper when the OPM was created.
• Patricia Ruggles, Drawing the Line: Alternative Poverty Measures and Their Implications for Public Policy (Washington, D.C.: The Urban Institute Press, 1990).
• David Brady and Zachary Parolin, “The Levels and Trends in Deep and Extreme Poverty in the U.S., 1993-2016,” Demography , volume 57, 2020, 2,337–2,360, https://doi.org/10.1007/s13524-020-00925-0 ..
• Aldi J.M. Hagenaars, “The Definition and Measurement of Poverty,” Economic Inequality and Poverty: International Perspectives (Armonk, NY: M.E. Sharpe, 1991), 141.
• Aldi J.M. Hagenaars, “The Definition and Measurement of Poverty,” Economic Inequality and Poverty: International Perspectives (Armonk, NY: M.E. Sharpe, 1991), 146.
• Peter Townsend, “Research on Poverty,” Wealth, Income and Inequality , edited by A. B. Atkinson (New York: Oxford University Press, 1980), 299–306, 300.
• Lee Rainwater and Timothy M. Smeeding, Poor Kids in a Rich Country (New York: Russell Sage Foundation, 2004), 9.
• As Smeeding argues, “In the broadest sense, all measures of poverty or economic need are relative, because context is important to the definition of even ‘absolute’ needs.” See Timothy Smeeding, “Poverty Measurement,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford: Oxford University Press, 2016), 27.
• This simple definition can be easily extended to deep and extreme poverty as well. As Parolin and the author have put it elsewhere, “To say that individuals are in ‘deep’ or ‘extreme’ poverty simply means that the gap between resources and needs is deeper or more extreme.” David Brady and Zachary Parolin, “The Levels and Trends in Deep and Extreme Poverty in the U.S., 1993-2016,” Demography , volume 57, 2020, 2,344, https://doi.org/10.1007/s13524-020-00925-0 .
• Peter Townsend, “Research on Poverty,” Wealth, Income and Inequality , edited by A. B. Atkinson (New York: Oxford University Press, 1980), 299–306.
• John Hills, Inequality and the State (New York: Oxford University Press, 2004); Lee Rainwater and Timothy M. Smeeding, Poor Kids in a Rich Country (New York: Russell Sage Foundation, 2004).
• John Hills, Inequality and the State (New York: Oxford University Press, 2004).
• Michael Harrington, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), 18, 187–188.
• Peter Townsend, “The Meaning of Poverty,” British Journal of Sociology , volume 13, 1962, 219 and 225).
• Bruce D. Meyer and James X. Sullivan, “Annual Report on U.S. Consumption Poverty: 2018,” October 18, 2019, https://leo.nd.edu/assets/339909/2018_consumption_poverty_report_1_.pdf .
• Basak Kus, Brian Nolan, and Christopher T. Whelan, “Material Deprivation and Consumption,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (New York: Oxford University Press, 2016), 577–601.
• They also use the more conservative inflation adjustment CPI-URS. As with other absolute measures like the OPM, there is zero objective and scientific basis for saying the bottom 13 percent of the consumption expenditure distribution is any sort of meaningful threshold. Indeed, they provide no real evidence at all for this arbitrarily chosen and rather absurdly low threshold. See Bruce D. Meyer and James X. Sullivan, “Winning the War: Poverty from the Great Society to the Great Recession,” Brookings Papers on Economic Activity , Fall, 2012, 133–200, https://www.brookings.edu/wp-content/uploads/2012/09/2012b_meyer.pdf.
• It is noteworthy that one has to dig into appendices to find their thresholds, as they do not make explicit and clear how low their thresholds are. It seems reasonable to conclude they do not want to make their thresholds transparent to the reader because it would be quite difficult to defend them. Indeed, one has to read other articles of theirs (e.g. Bruce D. Meyer and James X. Sullivan, “Winning the War: Poverty from the Great Society to the Great Recession,” Brookings Papers on Economic Activity , Fall, 2012, 133–200, https://www.brookings.edu/wp-content/uploads/2012/09/2012b_meyer.pdf) to fully understand their measure, because their presentation is opaque, unclear, and obfuscating in their 2018 report. Their 2018 report does offer another threshold based on the poor’s living standards in 2015. But even their alternative higher thresholds presume a family of four in 2018 is not poor with $20,000. All these thresholds are far below the OPM thresholds, which are already well-known to be too low. See Shawn Fremstad, “The Defining Down of Economic Deprivation: Why We Need to Reset the Poverty Line,” Bernard L. Schwartz Rediscovering Government Initiative, Bernard L. Schwartz Rediscovering Government Initiative, 2020, https://tcf.org/content/report/defining-economic-deprivation-need-reset-poverty-line/ .
• Particularly important to bringing Rawls into poverty measurement are the economists Anthony Atkinson and Amartya Sen. Despite Rawls’s influence on poverty and inequality debates, he made very few overt references to poverty; see Anthony B. Atkinson, “Chapter One: Social Exclusion, Poverty and Unemployment,” Centre for Analysis of Social Exclusion, case paper no. 4, January, 1998; Amartya Sen, Inequality Reexamined (Cambridge, MA: Harvard University Press, 1992); Amartya Sen, Development as Freedom (New York: Anchor Books, 1999); and John Rawls, A Theory of Justice, revised edition (Cambridge, MA: Harvard University Press, 1971, 1999). Atkinson notes that the word “poverty” does not even appear in Rawls’s extensive index (John Rawls, A Theory of Justice, revised edition (Cambridge, MA: Harvard University Press, 1971, 1999)); Anthony B. Atkinson, “On the Measurement of Poverty,” Econometrica , volume 55, 1987, 749–764. He discusses poverty a bit more later (e.g. John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001)), but mainly one needs to rely on his discussion of economic inequality.
• In his related “veil of ignorance,” Rawls argues that people should judge society as if they could be in that least fortunate group. According to Rawls, if that veil of ignorance is in place, we would choose societies that are most fair to that least fortunate group.
• John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001, 129–130).
• John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001), 132, emphasis added.
• John Rawls, A Theory of Justice, revised edition (Cambridge, MA: Harvard University Press, 1971, 1999), 84.
• John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001, 132, emphasis added.
• One could use Rawls’s maximin criterion to argue that Rawls endorsed absolute measures of poverty. But, Rawls (e.g. John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001), 68) wrote much about how justice depends on democratic equality and that this was compromised where there were large differences between classes. For example, he wrote, “Significant political and economic inequalities are often associated with inequalities of social status that encourage those of lower status to be viewed both by themselves and by others as inferior. . .It is close to being wrong or unjust in itself that in a status system, not everyone can have the highest rank. Status is a positional good, as is sometimes said. High status assumes other positions beneath it; so if we seek a higher status for ourselves, we in effect support a scheme that entails others’ having a lower status.” See John Rawls, Justice as Fairness: A Restatement (Cambridge, MA: Harvard University Press, 2001), 131.
• Emphasis added. Friedrich Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), 44-45.
• Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: The Modern Library, Random House, 1937; originally 1776), 821–822).
• Emphasis added, Geoffrey Gilbert, “Adam Smith on the Nature and Causes of Poverty,” Review of Social Economy , volume 55, 1997, 274.
• Geoffrey Gilbert, “Adam Smith on the Nature and Causes of Poverty,” Review of Social Economy , volume 55, 1997, 275.
• Hilary Silver, “Social Exclusion and Social Solidarity: Three Paradigms,” International Labour Review , volume 133, 531–578.
• Bea Cantillion, “The Challenge of Poverty and Exclusion,” Social Policy Studies , no. 21: “Family, Market, and Community: Equity and Efficiency in Social Policy,” 1997, 115–116 and 130.
• C. Schuyt and A. Tan, “De Maatschappelijke Betekenis Van Armoede. Deel II,” Op Zoek Naar Armoede En Bestaansonzekerheid Langs Twee Sporen, Nationale Raad Voor Maatschappelijk Welzijn, Rijswijk, 14.
• Ralf Dahrendorf, The Modern Social Conflict – An Essay on the Politics of Liberty (Berkeley, CA: The University of California Press, 1990), 151.
• G. Engbersen, “Moderne Armoede: Feit En Fictie,” Sociologische Gids , volume 37, 1991, 7–23.
• Anthony B. Atkinson, “Chapter One: Social Exclusion, Poverty and Unemployment,” Centre for Analysis of Social Exclusion, case paper no. 4, January, 1998), 20.
• Charles Gore, “Chapter 1 Introduction: Markets, Citizenship and Social Exclusion,” Social Exclusion: Rhetoric Reality Responses , edited by Gerry Rodgers, Charles Gore, and Jose B. Figueiredo (Geneva: International Labour Organization, 1995), 1–40.
• Michael Harrington, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), 11.
• Anthony B. Atkinson, “On the Measurement of Poverty,” Econometrica , volume 55, 1987, 749–764.
• William Julius Wilson, “Studying Inner-City Social Dislocations: The Challenge of Public Agenda Research,” American Sociological Review , volume 56, 1991, 1–14, https://doi.org/10.2307/2095669 .
• John Kenneth Galbraith, The Affluent Society (New York: Mariner Books, 1958), 235.
• Anthony B. Atkinson, Poverty in Europe (Malden, MA: Blackwell, 1998), 2.
• Hilary Silver, “Social Exclusion and Social Solidarity: Three Paradigms,” International Labour Review , volume 133, 531–578; Lee Rainwater and Timothy M. Smeeding, Poor Kids in a Rich Country (New York: Russell Sage Foundation, 2004).
• Amartya Sen, Inequality Reexamined (Cambridge, MA: Harvard University Press, 1992); Amartya Sen, Development as Freedom (New York: Anchor Books, 1999)); Martha C. Nussbaum, “Poverty and Human Functioning: Capabilities as Fundamental Entitlements,” Poverty and Inequality , edited by D.B. Grusky and R. Kanbur (Redwood City, CA: Stanford University Press, 2006), 47–75.
• Martha C. Nussbaum, “Poverty and Human Functioning: Capabilities as Fundamental Entitlements,” Poverty and Inequality , edited by D.B. Grusky and R. Kanbur (Redwood City, CA: Stanford University Press, 2006), 49).
• Rod Hick and Tania Burchardt, “Capability Deprivation,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford University Press, 2016), 75).
• Although Sen argued that there was value in absolute poverty measures when studying developing countries, he was clear that poverty should be measured relatively in developed countries like the U.S. Indeed, Sen stressed that the relatively poor in rich countries are capability deprived, even though they are well off in comparison to most of the people in the world. Sen explains, “Relative deprivation in terms of incomes can yield absolute deprivation in terms of capabilities ” (emphasis in original). See Amartya Sen, Development as Freedom (New York: Anchor Books, 1999), 89.
• Brian Barry, “Social Exclusion, Social Isolation and the Distribution of Income,” case paper no. 12, Centre for Analysis of Social Exclusion, London School of Economics, 1998.
• John Rawls, A Theory of Justice, revised edition (Cambridge, MA: Harvard University Press, 1971, 1999); see also Anthony B. Atkinson, “On the Measurement of Poverty,” Econometrica, volume 55, 1987, 749–764.
• Rod Hick and Tania Burchardt, “Capability Deprivation,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford University Press, 2016), 75–92.
• Rod Hick and Tania Burchardt, “Capability Deprivation,” The Oxford Handbook of the Social Science of Poverty , edited by D. Brady and L.M. Burton (Oxford University Press, 2016), 85–86).
• Anthony B. Atkinson, Poverty in Europe (Malden, MA: Blackwell, 1998), 27.
• Carolyn J. Hill and Robert T. Michael, “Measuring Poverty in the NLSY97,” Journal of Human Resources , volume 36, 2001, 727–761, https://doi.org/10.2307/3069640 .
• Michael Marmot, The Status Syndrome (New York: Owl Books, 2004).
• Malavika Subramanyam, Ichiro Kawachi, Lisa Berkman, and S.V. Subramanian, “Relative deprivation in income and self-rated health in the United States,” Social Science & Medicine , volume 69, 327–334, https://doi.org/10.1016/j.socscimed.2009.06.008 .
• Sandeep Mishra and R. Nicholas Carleton, “Subjective Relative Deprivation Is Associated With Poorer Physical and Mental Health,” Social Science & Medicine , volume 147, 144–149.
• Johan Fritzell, Johan Rehnberg, Jennie Bacchus Hertzman, and Jenni Blomgren, “Absolute or Relative? A Comparative Analysis of the Relationship Between Poverty and Mortality,” International Journal of Public Health , volume 60, 2014, 101–110, https://doi.org/10.1007/s00038-014-0614- 2; Marianne M. Hillemeier, John Lynch, Sam Harper, Trivellore Raghunathan, and George A. Kaplan, “Relative or Absolute Standards for Child Poverty: A State-Level Analysis of Infant and Child Mortality,” American Journal of Public Health , volume 93, 2003, 652–657, doi:10.2105/ajph.93.4.652; Jon M. Jachimowicz, Barnabas Szaszi, Marcel Lukas, David Smerdon, Jaideep Prabhu, and Elke U. Weber, “Higher Economic Inequality Intensifies the Financial Hardship of People Living in Poverty By Fraying the Community Buffer,” Nature Human Behavior , volume 4, 2020, 702–712.
• Alpaslan Akay and Peter Martinsson, “Does Relative Income Matter for the Very Poor? Evidence from Rural Ethiopia.” Economics Letters , volume 110, 2011, 213–215; Mohammad Niaz Asadullah and Nazmul Chaudhury. 2012. “Subjective Well-Being and Relative Poverty in Rural Bangladesh.” Journal of Economic Psychology volume 33, 2012, 940–950; Mary C. Daly, Daniel J. Wilson, and Norman J. Johnson, “Relative Status and Well-Being: Evidence from U.S. Suicide Deaths,” Review of Economics and Statistics , volume 95, 2013, 1480–1500.
• David Brady, Michaela Curran, and Richard Carpiano, “Relative Income Is More Important Than Absolute Income for Self-Reported Health and Well-Being,” working paper, 2021.
• The closest they get is to show cross-sectional differences between income and consumption poverty for some measures of deprivation and well-being. They mainly concentrate on showing how those “misclassified” with one or the other measure would differ in terms of well-being. For instance, they try to show that those defined as poor with an income-based measure but not poor with the consumption-based measure might have modestly better well-being than those defined as poor with the consumption measure. However, these comparisons fail to provide an adequate test of absolute versus relative measures of poverty. These comparisons also appear quite cherry-picked (e.g. it is not at all clear why certain well-being measures are shown and many alternatives in the datasets are not shown).
• Meyer and Sullivan occasionally declare and assert that consumption better reflects permanent income or long term economic resources than income. This reflects a widely rehearsed claim by many that refers back to Milton Friedman’s permanent income hypothesis. However, there is remarkably little—indeed, perhaps zero—evidence that consumption actually better proxies permanent income than income. In one of the few actual empirical studies using long-term panel data from both Germany and the United States, the author and colleagues find that current income predicts permanent income far better than a wide variety of alternative proxies; see David Brady, Marco Giesselmann, Ulrich Kohler, and Anke Radenacker, “How to Measure and Proxy Permanent Income: Evidence from Germany and the U.S.,” Journal of Economic Inequality , volume 16, 2018, 321–345, https://doi.org/10.1007/s10888-017-9363-9 . Meyer and Sullivan have never provided evidence that consumption actually proxies permanent income better than current income.

Tags: poverty measure , u.s. economy

David Brady, Contributor

David Brady is Professor in the School of Public Policy and Director of the Blum Initiative on Global and Regional Poverty at the University of California, Riverside. He is also Research Professor in Inequality and Social Policy at the WZB Berlin Social Science Center. He is the author of Rich Democracies, Poor People; and co-editor of The Oxford Handbook of the Social Science of Poverty.

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Poverty Is a Choice

Extreme poverty has declined, but the line is very low.

We live in what often feels like a biblically terrible time, marked by mass extinctions, deep recessions, epidemics, climate emergencies, inequality, and forever wars. But one thing, at least, has gotten better. More than 1 billion people have escaped extreme poverty—so many, so fast, that the world might be able to declare, within a decade, the end of this most miserable form of deprivation. “The global poverty rate is now lower than it has ever been in recorded history,” Jim Yong Kim, a former president of the World Bank, recently argued . “This is one of the greatest human achievements of our time.”

Or perhaps not. In an acidic rebuke to world leaders, the outgoing United Nations special rapporteur on poverty and human rights, Philip Alston, argues that the effort to end global poverty has failed. More people live in deprivation now than two decades ago. “We squandered a decade in the fight against poverty, with misplaced triumphalism blocking the very reforms that could have prevented the worst impacts of the pandemic,” Alston wrote in his last report .

So who’s right: Alston or Kim? The pessimistic argument is a hard one to make when looking at the raw, headline numbers. The global extreme-poverty rate fell from 36 percent in 1990 to 10 percent in 2015; the number of poor people dropped from 2 billion to 700 million. But Alston believes that by focusing only on those numbers, the world is deluding itself.

Read: A moral case for giving people money

The divisions between the World Bank’s economists and the UN’s special rapporteur are in some sense technical, about where to set the poverty line. They are in a more important sense interpretive, about whether progress has been fast or slow, and whether today’s global poverty counts are laudable or tragic.

This is a realm of yes-and s and no-but s, not direct refutations. Extreme poverty has declined rapidly, but the extreme-poverty line is very low: A person living below it spends no more than $1.90 a day, enough in many poor countries to cover some starch, a few fruits and vegetables, some cooking oil, a bit of protein, and that’s about it—with nothing left over for utilities, education, health care, transportation, or investment in wealth-generating assets, such as a cow or a motorbike. That poverty threshold represents “a staggeringly low standard of living, well below any reasonable conception of a life with dignity,” Alston argues—it is a catastrophic-destitution measure, not a poverty measure. He emphasizes the lack of progress made at the $3.20-a-day and $5.50-a-day poverty lines, too. Half the world lives on less than the latter figure.

Alston takes issue with the fact that the World Bank’s extreme-poverty line is an absolute measure, not a relative one: It sets a line and sees how many people cross it, country by country, rather than pegging the poverty threshold to median income, country by country. But “relative poverty is what really counts these days,” Alston told me, as it captures social exclusion, and the way that living on a few dollars a day is more challenging in middle-income countries like India and Kenya than in low-income countries like Afghanistan and Chad. “In a poorer country,” the bank itself explains , “participating in the job market may require only clothing and food, whereas someone in a richer society may also need access to the internet, transportation, and a cell phone.”

The bank also acknowledges that the global extreme-poverty line is low. It has generated a measure that includes relative poverty, and produces counts at the $3.20-a-day and $5.50-a-day lines. Its economists, researchers, and program experts stress that rising above the extreme-poverty line is no guarantee against malnutrition, stunted growth, early death, or any of the other horrible consequences of destitution.

But Alston’s most controversial, and most important, argument is that the focus on progress measured against the $1.90-a-day line—the prevalence of “everything’s getting better” arguments, made by Davos types like Bill Gates and Steven Pinker —has hampered progress toward true poverty eradication, and toward civil rights, social inclusion, and a basic standard of living for all. “By being able to rely so heavily on the World Bank's flagship figure, they can say, ‘Look, progress has been consistent. We’ve been doing great,’” Alston told me. “The implication of that is that the triumph of neoliberalism has brought with it very significant benefits for poor people. In reality, that’s just not the case.”

Read: How many people in the world are actually poor?

What if world leaders and multilateral institutions focused on the $5.50 line, or measures of poverty that capture social exclusion and relative deprivation? What if the headline story were that half the world still qualifies as desperately poor, and poverty head counts remain stubbornly high in dozens of countries? What if the story were not that we are succeeding, but that we are failing?

That story would not capture all the good that has happened in terms of infant-mortality rates falling, school-enrollment numbers rising, and malnutrition fading. But it would hold the world accountable for the fact that poverty is, always and everywhere, a choice. Alston’s view, and a necessary one, is that the world cannot wait for economic expansion to lift people above the poverty line. It cannot count on trade compacts and infrastructure projects and the ticking of GDP growth rates from 2.3 to 3.2 percent to do it. It needs direct interventions by governments, as fast as possible, to eliminate inequality and build safety nets, even in the poorest places.

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The Social Consequences of Poverty: An Empirical Test on Longitudinal Data

Carina mood.

Institute for Futures Studies, Box 591, 101 31 Stockholm, Sweden

Swedish Institute for Social Research (SOFI), Stockholm University, Stockholm, Sweden

Jan O. Jonsson

Nuffield College, OX1 1NF Oxford, England, UK

Poverty is commonly defined as a lack of economic resources that has negative social consequences, but surprisingly little is known about the importance of economic hardship for social outcomes. This article offers an empirical investigation into this issue. We apply panel data methods on longitudinal data from the Swedish Level-of-Living Survey 2000 and 2010 (n = 3089) to study whether poverty affects four social outcomes—close social relations (social support), other social relations (friends and relatives), political participation, and activity in organizations. We also compare these effects across five different poverty indicators. Our main conclusion is that poverty in general has negative effects on social life. It has more harmful effects for relations with friends and relatives than for social support; and more for political participation than organizational activity. The poverty indicator that shows the greatest impact is material deprivation (lack of cash margin), while the most prevalent poverty indicators—absolute income poverty, and especially relative income poverty—appear to have the least effect on social outcomes.

Introduction

According to the most influential definitions, poverty is seen as a lack of economic resources that have negative social consequences—this is in fact a view that dominates current theories of poverty (Townsend 1979 ; Sen 1983 ; UN 1995 ), and also has a long heritage (Smith 1776 /1976). The idea is that even when people have food, clothes, and shelter, economic problems lead to a deterioration of social relations and participation. Being poor is about not being able to partake in society on equal terms with others, and therefore in the long run being excluded by fellow citizens or withdrawing from social and civic life because of a lack of economic resources, typically in combination with the concomitant shame of not being able to live a life like them (e.g., Sen 1983 ). Economic hardship affects the standard of life, consumption patterns, and leisure time activities, and this is directly or indirectly related to the possibility of making or maintaining friends or acquaintances: poverty is revealed by not having appropriate clothes, or a car; by not being able to afford vacation trips, visits to the restaurant, or hosting dinner parties (e.g., Mack and Lansley 1985 ; Callan et al. 1993 )—in short, low incomes prevent the poor from living a life in “decency” (Galbraith 1958 ).

The relational nature of poverty is also central to the social exclusion literature, which puts poverty in a larger perspective of multiple disadvantages and their interrelationships (Hills et al. 2002 , Rodgers et al. 1995 ; Room 1995 ). While there are different definitions of the social exclusion concept, the literature is characterized by a move from distributional to relational concerns (Gore 1995 ) and by an emphasis on the importance of social integration and active participation in public life. The inability of living a decent or “ordinary” social life may in this perspective erode social networks, social relations, and social participation, potentially setting off a downward spiral of misfortune (Paugam 1995 ) reinforcing disadvantages in several domains of life. This perspective on poverty and social exclusion is essentially sociological: the playing field of the private economy is social. It is ultimately about individuals’ relations with other people—not only primary social relations, with kin and friends, but extending to secondary relations reflected by participation in the wider community, such as in organizations and in political life (UN 1995 ).

Despite the fact that the social consequences of limited economic resources are central to modern perspectives on poverty and marginalization, this relation is surprisingly seldom studied empirically. Qualitative research on the poor give interesting examples on how the negative effects of poverty works, and portray the way that economic problems are transformed into social ones (Ridge and Millar 2011 ; Attree 2006 ). Such studies, however, have too small sample sizes to generalize to the population, and they cannot tell us much about the range of the problem. The (relatively few) studies that have addressed the association between poverty and social outcomes on larger scale tend to verify that the poor have worse social relations (Böhnke 2008 ; Jonsson and Östberg 2004 ; Levitas 2006 ), but Barnes et al. ( 2002 ) did not find any noteworthy association between poverty (measured as relative income poverty, using the 60 %-limit) and social relations or social isolation. Dahl et al. ( 2008 ) found no relation between poverty and friendships, but report less participation in civic organizations among the poor. All these studies have however been limited to cross-sectional data or hampered by methodological shortcomings, and therefore have not been able to address the separation of selection effects from potentially causal ones.

Our aim in this study is to make good these omissions. We use longitudinal data from the Swedish Level of Living Surveys (LNU) 2000 and 2010 to study how falling into poverty, or rising from it, is associated with outcomes in terms of primary and secondary social relations, including participation in civil society. These panel data make it possible to generalize the results to the Swedish adult population (19–65 in 2000; 29–75 in 2010), to address the issue of causality, and to estimate how strong the relation between economic vulnerability and social outcomes is. Because the data provide us with the possibility of measuring poverty in several ways, we are also able to address the question using different—alternative or complementary—indicators. Poverty is measured as economic deprivation (lack of cash margin, self-reported economic problems), income poverty (absolute and relative), and long-term poverty, respectively. The primary, or core, social outcomes are indicated by having social support if needed, and by social relations with friends and relatives. We expand our analysis to secondary, or fringe, social outcomes in terms of participation in social life at large, such as in civil society: our indicators here include the participation in organizations and in political life.

Different Dimensions/Definitions of Poverty

In modern welfare states, the normal take on the issue of poverty is to regard it as the relative lack of economic resources, that is, to define the poor in relation to their fellow citizens in the same country at the same time. Three approaches dominate the scholarly literature today. The first takes as a point of departure the income deemed necessary for living a life on par with others, or that makes possible an “acceptable” living standard—defined as the goods and services judged necessary, often on the basis of consumer or household budget studies. This usage of a poverty threshold is often (somewhat confusingly) called absolute income poverty , and is most common in North America (cf. Corak 2006 for a review), although most countries have poverty lines defined for different kinds of social benefits. In Europe and in the OECD, the convention is instead to use versions of relative income poverty , defining as poor those whose incomes fall well behind the median income in the country in question (European Union using 60 % and OECD 50 % of the median as the threshold). As an alternative to using purchasing power (as in the “absolute” measure), this relative measure defines poverty by income inequality in the bottom half of the income distribution (Atkinson et al. 2002 ; OECD 2008 ).

The third approach argues that income measures are too indirect; poverty should instead be indicated directly by the lack of consumer products and services that are necessary for an acceptable living standard (Mack and Lansley 1985 ; Ringen 1988 ; Townsend 1979 ). This approach often involves listing a number of possessions and conditions, such as having a car, washing machine, modern kitchen; and being able to dine out sometimes, to have the home adequately heated and mended, to have sufficient insurances, and so on. An elaborate version includes information on what people in general see as necessities, what is often termed “consensual” poverty (e.g., Mack and Lansley 1985 ; Gordon et al. 2000 ; Halleröd 1995 ; van den Bosch 2001 ). Other direct indicators include the ability to cover unforeseen costs (cash margin) and subjective definitions of poverty (e.g., van den Bosch 2001 ). The direct approach to poverty has gained in popularity and measures of economic/material deprivation and consensual poverty are used in several recent and contemporary comparative surveys such as ECHP (Whelan et al. 2003 ) and EU-SILC (e.g., UNICEF 2012 ; Nolan and Whelan 2011 ).

It is often pointed out that, due to the often quite volatile income careers of households, the majority of poverty episodes are short term and the group that is identified as poor in the cross-section therefore tends to be rather diluted (Bane and Ellwood 1986 ; Duncan et al. 1993 ). Those who suffer most from the downsides of poverty are, it could be argued, instead the long-term, persistent, or chronically poor, and there is empirical evidence that those who experience more years in poverty also are more deprived of a “common lifestyle” (Whelan et al. 2003 ). Poverty persistence has been defined in several ways, such as having spent a given number of years below a poverty threshold, or having an average income over a number of years that falls under the poverty line (e.g., Duncan and Rodgers 1991 ; Rodgers and Rodgers 1993 ). The persistently poor can only be detected with any precision in longitudinal studies, and typically on the basis of low incomes, as data covering repeated measures of material deprivation are uncommon.

For the purposes of this study, it is not essential to nominate the best or most appropriate poverty measure. The measures outlined above, while each having some disadvantage, all provide plausible theoretical grounds for predicting negative social outcomes. Low incomes, either in “absolute” or relative terms, may inhibit social activities and participation because these are costly (e.g., having decent housing, needing a car, paying membership fees, entrance tickets, or new clothes). Economic deprivation, often indicated by items or habits that are directly relevant to social life, is also a valid representation of a lack of resources. Lastly, to be in long-term poverty is no doubt a worse condition than being in shorter-term poverty.

It is worth underlining that we see different measures of poverty as relevant indicators despite the fact that the overlap between them often is surprisingly small (Bradshaw and Finch 2003 ). The lack of overlap is not necessarily a problem, as different people may have different configurations of economic problems but share in common many of the experiences of poverty—experiences, we argue, that are (in theory at least) all likely to lead to adverse social outcomes. Whether this is the case or not is one of the questions that we address, but if previous studies on child poverty are of any guidance, different definitions of poverty may show surprisingly similar associations with a number of outcomes (Jonsson and Östberg 2004 ).

What are the Likely Social Consequences of Poverty?

We have concluded that poverty is, according to most influential poverty definitions, manifested in the social sphere. This connects with the idea of Veblen ( 1899 ) of the relation between consumption and social status. What you buy and consume—clothes, furniture, vacation trips—in part define who you are, which group you aspire to belong to, and what view others will have of you. Inclusion into and exclusion from status groups and social circles are, in this view, dependent on economic resources as reflected in consumption patterns. While Veblen was mostly concerned about the rich and their conspicuous consumption, it is not difficult to transfer these ideas to the less fortunate: the poor are under risk of exclusion, of losing their social status and identity, and perhaps also, therefore, their friends. It is however likely that this is a process that differs according to outcome, with an unknown time-lag.

If, as outlined above, we can speak of primary and secondary social consequences, the former should include socializing with friends, but also more intimate relations. Our conjecture is that the closer the relation, the less affected is it by poverty, simply because intimate social bonds are characterized by more unconditional personal relations, typically not requiring costs to uphold.

When it comes to the secondary social consequences, we move outside the realm of closer interpersonal relations to acquaintances and the wider social network, and to the (sometimes relatively anonymous) participation in civil or political life. This dimension of poverty lies at the heart of the social exclusion perspective, which strongly emphasizes the broader issues of societal participation and civic engagement, vital to democratic societies. It is also reflected in the United Nation’s definition, following the Copenhagen summit in 1995, where “overall poverty” in addition to lack of economic resources is said to be “…characterized by lack of participation in decision-making and in civil, social, and cultural life” (UN 1995 , p. 57). Poverty may bring about secondary social consequences because such participation is costly—as in the examples of travel, need for special equipment, or membership fees—but also because of psychological mechanisms, such as lowered self-esteem triggering disbelief in civic and political activities, and a general passivity leading to decreased organizational and social activities overall. If processes like these exist there is a risk of a “downward spiral of social exclusion” where unemployment leads to poverty and social isolation, which in turn reduce the chances of re-gaining a footing in the labour market (Paugam 1995 ).

What theories of poverty and social exclusion postulate is, in conclusion, that both what we have called primary and secondary social relations will be negatively affected by economic hardship—the latter supposedly more than the former. Our strategy in the following is to test this basic hypothesis by applying multivariate panel-data analyses on longitudinal data. In this way, we believe that we can come further than previous studies towards estimating causal effects, although, as is the case in social sciences, the causal relation must remain preliminary due to the nature of observational data.

Data and Definitions

We use the two most recent waves of the Swedish Level-of-living Survey, conducted in 2000 and 2010 on random (1/1000) samples of adult Swedes, aged 18–75. 1 The attrition rate is low, with 84 % of panel respondents remaining from 2000 to 2010. This is one of the few data sets from which we can get over-time measures of both poverty and social outcomes for a panel that is representative of the adult population (at the first time point, t 0 )—in addition, there is annual income information from register data between the waves. The panel feature obviously restricts the age-groups slightly (ages 19–65 in 2000; 29–75 in 2010), the final number of analyzed cases being between 2995 and 3144, depending on the number of missing cases on the respective poverty measure and social outcome variable. For ease of interpretation and comparison of effect sizes, we have constructed all social outcome variables and poverty variables to be dichotomous (0/1). 2

In constructing poverty variables, we must balance theoretical validity with the need to have group sizes large enough for statistical analysis. For example, we expand the absolute poverty measure to include those who received social assistance any time during the year. As social assistance recipients receive this benefit based on having an income below a poverty line that is similar to the one we use, this seems justifiable. In other cases, however, group sizes are small but we find no theoretically reasonable way of making the variables more inclusive, meaning that some analyses cannot be carried out in full detail.

Our income poverty measures are based on register data and are thus free from recall error or misreporting, but—as the proponents of deprivation measures point out—income poverty measures are indirect measures of hardship. The deprivation measure is more direct, but self-reporting always carries a risk of subjectivity in the assessment. To the extent that changes in one’s judgment of the economic situation depend on changes in non-economic factors that are also related to social relations, the deprivation measure will give upwardly biased estimates. 3 As there is no general agreement about whether income or deprivation definitions are superior, our use of several definitions is a strength because the results will give an overall picture that is not sensitive to potential limitations in any one measure. In addition, we are able to see whether results vary systematically across commonly used definitions.

Poverty Measures

• Cash margin whether the respondent can raise a given sum of money in a week, if necessary (in 2000, the sum was 12,000 SEK; in 2010, 14,000 SEK, the latter sum corresponding to approximately 1600 Euro, 2200 USD, or 1400 GBP in 2013 currency rates). For those who answer in the affirmative, there is a follow-up question of how this can be done: by (a) own/household resources, (b) borrowing.
• Economic crisis Those who claim that they have had problems meeting costs for rent, food, bills, etc. during the last 12 months (responded “yes” to a yes/no alternative).
• Absolute poverty is defined as either (a) having a disposable family income below a poverty threshold or (b) receiving social assistance, both assessed in 1999 (for the survey 2000) or 2009 (for the survey 2010). The poverty line varies by family type/composition according to a commonly used calculation of household necessities (Jansson 2000 ). This “basket” of goods and services is intended to define an acceptable living standard, and was originally constructed for calculating an income threshold for social assistance, with addition of estimated costs for housing and transport. The threshold is adjusted for changes in the Consumer Price Index, using 2010 as the base year. In order to get analyzable group sizes, we classify anyone with an income below 1.25 times this threshold as poor. Self-employed are excluded because their nominal incomes are often a poor indicator of their economic standard.
• Deprived and income poor A combination of the indicator of economic deprivation and the indicator of absolute poverty. The poor are defined as those who are economically deprived and in addition are either absolute income-poor or have had social assistance some time during the last calendar year.
• Long - term poor are defined as those interviewed in 2010 (2000) who had an equivalized disposable income that fell below the 1.25 absolute poverty threshold (excluding self-employed) or who received social assistance in 2009 (1999), and who were in this situation for at least two of the years 2000–2008 (1990–1998). The long-term poor (coded 1) are contrasted to the non-poor (coded 0), excluding the short-term poor (coded missing) in order to distinguish whether long-term poverty is particularly detrimental (as compared to absolute poverty in general).
• Relative poverty is defined, according to the EU standard, as having a disposable equivalized income that is lower than 60 % of the median income in Sweden the year in question (EU 2005). 4 As for absolute poverty, this variable is based on incomes the year prior to the survey year. Self-employed are excluded.

Social and Participation Outcomes

Primary (core) social relations.

• Social support The value 1 (has support) is given to those who have answered in the positive to three questions about whether one has a close friend who can help if one (a) gets sick, (b) needs someone to talk to about troubles, or (c) needs company. Those who lack support in at least one of these respects are coded 0 (lack of support).
• Frequent social relations This variable is based on four questions about how often one meets (a) relatives and (b) friends, either (i) at ones’ home or (ii) at the home of those one meets, with the response set being “yes, often”, “sometimes”, and “no, never”. Respondents are defined as having frequent relations (1) if they have at least one “often” of the four possible and no “never”, 5 and 0 otherwise.

Secondary (fringe) Social Relations/Participation

• Political participation : Coded 1 (yes) if one during the last 12 months actively participated (held an elected position or was at a meeting) in a trade union or a political party, and 0 (no) otherwise. 6
• Organizational activity : Coded 1 (yes) if one is a member of an organization and actively participate in its activities at least once in a year, and 0 (no) otherwise.

Control Variables

• Age (in years)
• Educational qualifications in 2010 (five levels according to a standard schema used by Statistics Sweden (1985), entered as dummy variables)
• Civil status distinguishes between single and cohabiting/married persons, and is used as a time-varying covariate (TVC) where we register any changes from couple to single and vice versa.
• Immigrant origin is coded 1 if both parents were born in any country outside Sweden, 0 otherwise.
• Labour market status is also used as a TVC, with four values indicating labour market participation (yes/no) in 2000 and 2010, respectively.
• Global self - rated health in 2000, with three response alternatives: Good, bad, or in between. 7

Table  1 shows descriptive statistics for the 2 years we study, 2000 and 2010 (percentages in the upper panel; averages, standard deviations, max and min values in the lower panel). Recall that the sample is longitudinal with the same respondents appearing in both years. This means, naturally, that the sample ages 10 years between the waves, the upper age limit being pushed up from 65 to 75. Both the change over years and the ageing of the sample have repercussions for their conditions: somewhat more have poor health, for example, fewer lack social support but more lack frequent social relations, and more are single in 2010 (where widows are a growing category). The group has however improved their economic conditions, with a sizeable reduction in poverty rates. Most of the changes are in fact period effects, and it is particularly obvious for the change in poverty—in 2000 people still suffered from the deep recession in Sweden that begun in 1991 and started to turn in 1996/97 (Jonsson et al. 2010 ), while the most recent international recession (starting in 2008/09) did not affect Sweden that much.

Table 1

Descriptive statistics of dependent and independent variables in the LNU panel

N for variables used as change variables pertains to non-missing observations in both 2000 and 2010

The overall decrease in poverty masks changes that our respondents experienced between 2000 and 2010: Table  2 reveals these for the measure of economic deprivation, showing the outflow (row) percentages and the total percentages (and the number of respondents in parentheses). It is evident that there was quite a lot of mobility out of poverty between the years (61 % left), but also a very strong relative risk of being found in poverty in 2010 among those who were poor in 2000 (39 vs. 5 % of those who were non-poor in 2000). Of all our respondents, the most common situation was to be non-poor both years (81 %), while few were poor on both occasions (6 %). Table  2 also demonstrates some small cell numbers: 13.3 % of the panel (9.4 % + 3.9 %), or a good 400 cases, changed poverty status, and these cases are crucial for identifying our models. As in many panel studies based on survey data, this will inevitably lead to some problems with large standard errors and difficulties in arriving at statistically significant and precise estimates; but to preview the findings, our results are surprisingly consistent all the same.

Table 2

Mobility in poverty (measured as economic deprivation) in Sweden between 2000 and 2010

Outflow percentage (row %), total percentage, and number of cases (in parentheses). LNU panel 2000–2010

We begin with showing descriptive results of how poverty is associated with our outcome variables, using the economic deprivation measure of poverty. 8 Figure  1 confirms that those who are poor have worse social relationships and participate less in political life and in organizations. Poverty is thus connected with both primary and secondary social relations.

The relation between poverty (measured as economic deprivation) and social relations/participation in Sweden, LNU 2010. N = 5271

The descriptive picture in Fig.  1 does not tell us anything about the causal nature of the relation between poverty and social outcomes, only that such a relation exists, and that it is in the predicted direction: poor people have weaker social relations, less support, and lower levels of political and civic participation. Our task now is to apply more stringent statistical models to test whether the relation we have uncovered is likely to be of a causal nature. This means that we must try to rid the association of both the risk for reverse causality—that, for example, a weaker social network leads to poverty—and the risk that there is a common underlying cause of both poverty and social outcomes, such as poor health or singlehood.

The Change Model

First, as we have panel data, we can study the difference in change across two time-points T (called t 0 and t 1 , respectively) in an outcome variable (e.g., social relations), between groups (i.e. those who changed poverty status versus those who did not). The respondents are assigned to either of these groups on the grounds of entering or leaving poverty; in the first case, one group is non-poor at t 0 but experiences poverty at t 1 , and the change in this group is compared to the group consisting of those who are non-poor both at t 0 and t 1 . The question in focus then is: Do social relations in the group entering poverty worsen in relation to the corresponding change in social relations in the group who remains non-poor? Because we have symmetric hypotheses of the effect of poverty on social outcomes—assuming leaving poverty has positive consequences similar to the negative consequences of entering poverty—we also study whether those who exit poverty improve their social outcomes as compared to those remaining poor. We ask, that is, not only what damage falling into poverty might have for social outcomes, but also what “social gains” could be expected for someone who climbs out of poverty.

Thus, in our analyses we use two different “change groups”, poverty leavers and poverty entrants , and two “comparison groups”, constantly poor and never poor , respectively. 9 The setup comparing the change in social outcomes for those who change poverty status and those who do not is analogous to a so-called difference-in-difference design, but as the allocation of respondents to comparison groups and change groups in our data cannot be assumed to be random (as with control groups and treatment groups in experimental designs), we take further measures to approach causal interpretations.

Accounting for the Starting Value of the Dependent Variable

An important indication of the non-randomness of the allocation to the change and comparison groups is that their average values of the social outcomes (i.e. the dependent variable) at t 0 differ systematically: Those who become poor between 2000 and 2010 have on average worse social outcomes already in 2000 than those who stay out of poverty. Similarly, those who stay in poverty both years have on average worse social outcomes than those who have exited poverty in 2010. In order to further reduce the impact of unobserved variables, we therefore make all comparisons of changes in social outcomes between t 0 and t 1 for fixed t 0 values of both social outcome and poverty status.

As we use dichotomous outcome variables, we get eight combinations of poverty and outcome states (2 × 2 × 2 = 8), and four direct strategic comparisons:

• Poverty leavers versus constantly poor, positive social outcome in 2000 , showing if those who exit poverty have a higher chance of maintaining the positive social outcome than those who stay in poverty
• Poverty leavers versus constantly poor, negative social outcome in 2000 , showing if those who exit poverty have a higher chance of improvement in the social outcome than those who stay in poverty
• Poverty entrants versus never poor, positive social outcome in 2000 , showing if those who enter poverty have a higher risk of deterioration in the social outcome than those who stay out of poverty, and
• Poverty entrants versus never poor, negative social outcome in 2000 , showing if those who enter poverty have a lower chance of improvement in the social outcome.

Thus, we hold the initial social situation and poverty status fixed, letting only the poverty in 2010 vary. 10 The analytical strategy is set out in Table  3 , showing estimates of the probability to have frequent social relations in 2010, for poverty defined (as in Table  2 and Fig.  1 above) as economic deprivation.

Table 3

Per cent with frequent social relations in “comparison” and “change” groups in 2000 and 2010, according to initial value on social relations in 2000 and poverty (measured as economic deprivation) in 2000 and 2010

LNU panel 2000–2010. N = 3083

The figures in Table  3 should be read like this: 0.59 in the upper left cell means that among those who were poor neither in 2000 nor in 2010 (“never poor”, or 0–0), and who had non-frequent social relations to begin with, 59 % had frequent social relations in 2010. Among those never poor who instead started out with more frequent social relations, 90 per cent had frequent social relations in 2010. This difference (59 vs. 90) tells us either that the initial conditions were important (weak social relations can be inherently difficult to improve) or that there is heterogeneity within the group of never poor people, such as some having (to us perhaps unobserved) characteristics that support relation building while others have not.

Because our strategy is to condition on the initial situation in order to minimize the impact of initial conditions and unobserved heterogeneity, we focus on the comparisons across columns. If we follow each column downwards, that is, for a given initial social outcome (weak or not weak social relations, respectively) it is apparent that the outcome is worse for the “poverty entrants” in comparison with the “never poor” (upper three lines). Comparing the change group [those who became poor (0–1)] with the comparison group [never poor (0–0)] for those who started out with weak social relations (left column), the estimated probability of frequent social relations in 2010 is 7 % points lower for those who became poor. Among those who started out with frequent relations, those who became poor have a 17 % points lower probability of frequent relations in 2010 than those who stayed out of poverty.

If we move down Table  3 , to the three bottom lines, the change and comparison groups are now different. The comparison group is the “constantly poor” (1–1), and the change group are “poverty leavers” (1–0). Again following the columns downwards, we can see that the change group improved their social relations in comparison with the constantly poor; and this is true whether they started out with weak social relations or not. In fact, the chance of improvement for those who started off with non-frequent social relations is the most noteworthy, being 33 % units higher for those who escaped poverty than for those who did not. In sum, Table  3 suggests that becoming poor appears to be bad for social relations whereas escaping poverty is beneficial.

Expanding the Model

The model exemplified in Table  3 is a panel model that studies change across time within the same individuals, conditioning on their initial state. It does away with time-constant effects of observed and unobserved respondent characteristics, and although this is far superior to a cross-sectional model (such as the one underlying Fig.  1 ) there are still threats to causal interpretations. It is possible (if probably unusual) that permanent characteristics may trigger a change over time in both the dependent and independent variables; or, put in another way, whether a person stays in or exits poverty may be partly caused by a variable that also predicts change in the outcome (what is sometimes referred to as a violation of the “common trend assumption”). In our case, we can for example imagine that health problems in 2000 can affect who becomes poor in 2010, at t 1 , and that the same health problems can lead to a deterioration of social relations between 2000 and 2010, so even conditioning on the social relations at t 0 will not be enough. This we handle by adding control variables, attempting to condition the comparison of poor and non-poor also on sex, age, highest level of education (in 2010), immigrant status, and health (in 2000). 11

Given the set-up of our data—with 10 years between the two data-points and with no information on the precise time ordering of poverty and social outcomes at t 1 , the model can be further improved by including change in some of the control variables. It is possible, for example, that a non-poor and married respondent in 2000 divorced before 2010, triggering both poverty and reduced social relations at the time of the interview in 2010. 12 There are two major events that in this way may bias our results, divorce/separation and unemployment (because each can lead to poverty, and possibly also affect social outcomes). We handle this by controlling for variables combining civil status and unemployment in 2000 as well as in 2010. To the extent that these factors are a consequence of becoming poor, there is a risk of biasing our estimates downwards (e.g., if becoming poor increases the risk of divorce). However, as there is no way to distinguish empirically whether control variables (divorce, unemployment) or poverty changed first we prefer to report conservative estimates. 13

Throughout, we use logistic regression to estimate our models (one model for each social outcome and poverty definition). We create a dummy variable for each of the combinations of poverty in 2000, poverty in 2010 and the social outcome in 2000, and alternate the reference category in order to get the four strategic comparisons described above. Coefficients do thus express the distance between the relevant change and comparison groups. The coefficients reported are average marginal effects (AME) for a one-unit change in the respective poverty variable (i.e. going from non-poor to poor and vice versa), which are straightforwardly interpretable as percentage unit differences and (unlike odds ratios or log odds ratios) comparable across models and outcomes (Mood 2010 ).

Regression Results

As detailed above, we use changes over time in poverty and social outcomes to estimate the effects of interest. The effect of poverty is allowed to be heterogeneous, and is assessed through four comparisons of the social outcome in 2010 (Y 1 ):

• Those entering poverty relative to those in constant non-poverty (P 01  = 0,1 vs. P 01  = 0,0) when both have favourable social outcomes at t 0 (Y 0  = 1)
• Those exiting poverty relative to those in constant poverty (P 01  = 1,0 vs. P 01  = 1,1) when both have favourable social outcomes at t 0 (Y 0  = 1)
• Those entering poverty relative to those in constant non-poverty (P 01  = 0,1 vs. P 01  = 0,0) when both have non-favourable social outcomes at t 0 (Y 0  = 0)
• Those exiting poverty relative to those in constant poverty (P 01  = 1,0 vs. P 01  = 1,1) when both have non-favourable social outcomes at t 0 (Y 0  = 0)

Poverty is a rare outcome, and as noted above it is particularly uncommon to enter poverty between 2000 and 2010 because of the improving macro-economic situation. Some of the social outcomes were also rare in 2000. This unfortunately means that in some comparisons we have cell frequencies that are prohibitively small, and we have chosen to exclude all comparisons involving cells where N < 20.

The regression results are displayed in Table  4 . To understand how the estimates come to be, consider the four in the upper left part of the Table (0.330, 0.138, −0.175 and −0.065), reflecting the effect of poverty, measured as economic deprivation, on the probability of having frequent social relations. Because these estimates are all derived from a regression without any controls, they are identical (apart from using three decimal places) to the percentage comparisons in Table  3 (0.33, 0.14, −0.17, −0.07), and can be straightforwardly interpreted as average differences in the probability of the outcome in question. From Table  4 it is clear that the three first differences are all statistically significant, whereas the estimate −0.07 is not (primarily because those who entered poverty in 2010 and had infrequent social relations in 2000 is a small group, N = 25).

Table 4

Average marginal effects (from logistic regression) of five types of poverty (1–5) on four social outcomes (A-D) comparing those with different poverty statuses in 2000 and 2010 and conditioning on the starting value of the social outcome (in 2000)

Right columns control for sex, education, age, immigrant status, health in 2000, civil status change between 2000 and 2010, and unemployment change between 2000 and 2010. P values in parentheses. Excluded estimates involve variable categories with N < 20. Shaded cells are in hypothesized direction, bold estimates are statistically significant ( P  < 0.05). N in regressions: 1A: 3075; 1B: 3073; 1C: 3075; 1D: 3069; 2A: 3144; 2B: 3137; 2C: 3144; 2D: 3130; 3A: 3074, 3B: 3072; 3C: 3074; 3D: 3068; 4A: 2995; 4B: 2988; 4C: 2995; 4D: 2981; 5A: 3128; 5B: 3121; 5C: 3128; 5D: 3114

In the column to the right, we can see what difference the controls make: the estimates are reduced, but not substantially so, and the three first differences are still statistically significant.

The estimates for each social outcome, reflecting the four comparisons described above, support the hypothesis of poverty affecting social relations negatively (note that the signs of the estimates should differ in order to do so, the upper two being positive as they reflect an effect of the exit from poverty, and the lower two being negative as they reflect an effect of entering poverty). We have indicated support for the hypothesis in Table  4 by shading the estimates and standard errors for estimates that go in the predicted direction.

Following the first two columns down, we can see that there is mostly support for the hypothesis of a negative effect of poverty, but when controlling for other variables, the effects on social support are not impressive. In fact, if we concentrate on each social outcome (i.e., row-wise), one conclusion is that, when controlling for confounders, there are rather small effects of poverty on the probability of having access to social support. The opposite is true for political participation, where the consistency in the estimated effects of poverty is striking.

If we instead follow the columns, we ask whether any of the definitions of poverty is a better predictor of social outcomes than the others. The measure of economic deprivation appears to be the most stable one, followed by absolute poverty and the combined deprivation/absolute poverty variable. 14 The relative poverty measure is less able to predict social outcomes: in many instances it even has the non-expected sign. Interestingly, long-term poverty (as measured here) does not appear to have more severe negative consequences than absolute poverty in general.

Because some of our comparison groups are small, it is difficult to get high precision in the estimates, efficiency being a concern particularly in view of the set of control variables in Table  4 . Only 14 out of 62 estimates in models with controls are significant and in the right direction. Nonetheless, with 52 out of 62 estimates in these models having the expected sign, we believe that the hypothesis of a negative effect of poverty on social outcomes receives quite strong support.

Although control variables are not shown in the table, one thing should be noted about them: The reduction of coefficients when including control variables is almost exclusively driven by changes in civil status. 15 The time constant characteristics that are included are cross-sectionally related to both poverty and social outcomes, but they have only minor impacts on the estimated effects of poverty. This suggests that the conditioning on prior values of the dependent and independent variables eliminates much time invariant heterogeneity, which increases the credibility of estimates.

Conclusions

We set out to test a fundamental, but rarely questioned assumption in dominating definitions of poverty: whether shortage of economic resources has negative consequences for social relations and participation. By using longitudinal data from the Swedish Level-of-living Surveys 2000 and 2010, including repeated measures of poverty (according to several commonly used definitions) and four social outcome variables, we are able to come further than previous studies in estimating the relation between poverty and social outcomes: Our main conclusion is that there appears to be a causal relation between them.

Panel models suggest that falling into poverty increases the risk of weakening social relations and decreasing (civic and political) participation. Climbing out of poverty tends to have the opposite effects, a result that strengthens the interpretation of causality. The sample is too small to estimate the effect sizes with any precision, yet they appear to be substantial, with statistically significant estimates ranging between 5 and 21 % units.

While these findings are disquieting insofar as poverty goes, our results also suggest two more positive results. First, the negative effects of poverty appear to be reversible: once the private economy recovers, social outcomes improve. Secondly, the negative consequences are less for the closest social relations, whether there is someone there in cases of need (sickness, personal problems, etc.). This is in line with an interpretation of such close relations being unconditional: our nearest and dearest tend to hang on to us also in times of financial troubles, which may bolster risks for social isolation and psychological ill-being,

Our finding of negative effects of poverty on civic and political participation relates to the fears of a “downward spiral of social exclusion”, as there is a risk that the loss of less intimate social relations shrinks social networks and decreases the available social capital in terms of contacts that can be important for outcomes such as finding a job (e.g., Lin 2001 ; Granovetter 1974 ). However, Gallie et al. ( 2003 ) found no evidence for any strong impact of social isolation on unemployment, suggesting that the negative effects on social outcomes that we observe are unlikely to lead to self-reinforcement of poverty. Nevertheless, social relations are of course important outcomes in their own right, so if they are negatively affected by poverty it matters regardless of whether social relations in turn are important for other outcomes. Effects on political and civic participation are also relevant in themselves beyond individuals’ wellbeing, as they suggest a potentially democratic problem where poor have less of a voice and less influence on society than others.

Our results show the merits of our approach, to study the relation between poverty and social outcomes longitudinally. The fact that the poor have worse social relations and lower participation is partly because of selection. This may be because the socially isolated, or those with a weaker social network, more easily fall into poverty; or it can be because of a common denominator, such as poor health or social problems. But once we have stripped the analysis of such selection effects, we also find what is likely to be a causal relation between poverty and social relations. However, this effect of poverty on social outcomes, in turn, varies between different definitions of poverty. Here it appears that economic deprivation, primarily indicated by the ability of raising money with short notice, is the strongest predictor of social outcomes. Income poverty, whether in absolute or (particularly) relative terms, are weaker predictors of social outcomes, which is interesting as they are the two most common indicators of poverty in existing research.

Even if we are fortunate to have panel data at our disposal, there are limitations in our analyses that render our conclusions tentative. One is that we do not have a random allocation to the comparison groups at t 0 ; another that there is a 10-year span between the waves that we analyze, and both poverty and social outcomes may vary across this time-span. We have been able to address these problems by conditioning on the outcome at t 0 and by controlling for confounders, but in order to perform more rigorous tests future research would benefit from data with a more detailed temporal structure, and preferably with an experimental or at least quasi-experimental design.

Finally, our analyses concern Sweden, and given the position as an active welfare state with a low degree of inequality and low poverty rates, one can ask whether the results are valid also for other comparable countries. While both the level of poverty and the pattern of social relations differ between countries (for policy or cultural reasons), we believe that the mechanisms linking poverty and social outcomes are of a quite general kind, especially as the “costs for social participation” can be expected to be relative to the general wealth of a country—however, until comparative longitudinal data become available, this must remain a hypothesis for future research.

1 http://www.sofi.su.se/english/2.17851/research/three-research-departments/lnu-level-of-living .

2 We have tested various alternative codings and the overall pattern of results in terms of e.g., direction of effects and differences across poverty definitions are similar, but more difficult to present in an accessible way.

3 Our deprivation questions are however designed to reduce the impact of subjectivity by asking, e.g., about getting a specified sum within a specified time (see below).

4 In the equivalence scale, the first adult gets a weight of one, the second of 0.6, and each child gets a weight of 0.5.

5 We have also tried using single indicators (either a/b or i/ii) without detecting any meaningful difference between them. One would perhaps have assumed that poverty would be more consequential for having others over to one’s own place, but the absence of support for this can perhaps be understood in light of the strong social norm of reciprocity in social relations.

6 We have refrained from using information on voting and membership in trade unions and political parties, because these indicators do not capture the active, social nature of civic engagement to the same extent as participation in meetings and the holding of positions.

7 We have also estimated models with a more extensive health variable, a s ymptom index , which sums responses to 47 questions about self-reported health symptoms. However, this variable has virtually zero effects once global self-rated health is controlled, and does not lead to any substantive differences in other estimates. Adding the global health measure and the symptom index as TVC had no effect either.

8 Using the other indicators of poverty yields very similar results, although for some of those the difference between poor and non-poor is smaller.

9 We call these comparison groups ”never poor” and ”constantly poor” for expository purposes, although their poverty status pertains only to the years 2000 and 2010, i.e., without information on the years in between.

10 With this design we allow different effects of poverty on improvement versus deterioration of the social outcome. We have also estimated models with a lagged dependent variable, which constrains the effects of poverty changes to be of the same size for deterioration as for improvement of the social outcome. Conclusions from that analysis are roughly a weighted average of the estimates for deterioration and improvement that we report. As our analyses suggest that effects of poverty differ in size depending on the value of the lagged dependent variable (the social outcome) our current specification gives a more adequate representation of the process.

11 We have also tested models with a wider range of controls for, e.g., economic and social background (i.e. characteristics of the respondent’s parents), geography, detailed family type and a more detailed health variable, but none of these had any impact on the estimated poverty effects.

12 It is also possible that we register reverse causality, namely if worsening social outcomes that occur after t 0 lead to poverty at t 1 . This situation is almost inevitable when using panel data with no clear temporal ordering of events occurring between waves. However, reverse causality strikes us, in this case, as theoretically implausible.

13 We have also estimated models controlling for changes in health, which did not change the results.

14 If respondents’ judgments of the deprivation questions (access to cash margin and ability to pay rent, food, bills etc.) change due to non-economic factors that are related to changes in social relations, the better predictive capacity of the deprivation measure may be caused by a larger bias in this measure than in the (register-based) income measures.

15 As mentioned above, this variable may to some extent be endogenous (i.e., a mediator of the poverty effect rather than a confounder), in which case we get a downward bias of estimates.

Contributor Information

Carina Mood, Phone: +44-8-402 12 22, Email: [email protected] .

Jan O. Jonsson, Phone: +44 1865 278513, Email: [email protected] .

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Definition of absolute and relative poverty

There are two main classifications of poverty:

• Absolute poverty – is a condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing). This condition makes it possible to compare between different countries and also over time.
• Relative poverty – A condition where household income is a certain percentage below median incomes. For example, the threshold for relative poverty could be set at 50% of median incomes (or 60%)

Absolute poverty

There will be different concepts of what is a necessary level to maintain basic living standards. The United Nations defined absolute poverty as

“a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.”

UN World Summit for economic development  (1995)

Absolute poverty could be set at a constant real income level, e.g. real income of $500 per year. However, it would have to take into account different living standards between countries. $500 would be insufficient to gain shelter in New York, but maybe in Africa. The UN summit on poverty called for countries to develop their own measure.

Also, over time concepts of what constitutes ‘basic necessities of life’ may change. In the eighteenth century, it may be food and shelter, whereas, in modern-day Western economies, we may expand it to include food, shelter, electricity, cooking, access to basic health care.

The World Bank define poverty as

“Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity.”

Poverty line

This is a concept used to give a rough guide to poverty across countries. Originally introduced as $1 a day. In 2015, the World Bank reset the poverty line to  $1.90 a day (using PPP exchange rates) ( World Bank )

Relative poverty

Relative poverty is useful for showing the percentage of the population who have been relatively left behind. Concepts of relative poverty are very different in the 2010s to a century ago.

Primary and secondary poverty

Primary poverty is defined as a situation where income is insufficient to meet basic needs – even if every penny is spent wisely.

Secondary poverty is defined as a situation where money is misspent on luxuries – leaving insufficient disposable income to buy necessities.

Joseph Rowntree in his groundbreaking study “Poverty: a study of Town Life” (1899) investigated living conditions in York and found 24% of the population were living in primary poverty. His detailed methodology showed that poverty was due to insufficient income and not due to the extravagance of spending often attributed to poverty by the Victorians.

Poverty from a sociological perspective

Peter Townsend defined poverty not just from the perspective of income – but can people participate in activities which make them feel part of society. He defined it as:

“Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and the amenities which are customary, or at least widely encouraged or approved in the societies to which they belong. Their resources are so seriously below those commanded by the average family that they are in effect excluded from the ordinary living patterns, customs, and activities (Townsend, P. (1979).  Poverty in the United Kingdom . London: Penguin page 31)

Persistent poverty

Persistent poverty is defined as a situation where households find income is less than 60% of median incomes for 2 out of 3 years. This is important as long-term poverty has greater consequences than short-term.

Levels of persistent relative poverty in the EU – effectively shows degree of inequality.

Multidimensional Poverty Index (MPI)

published by the UN in 2010. It measures poverty as an acute deprivation of essential aspects of life. It measures three key targets – living standards, education and healthcare.

MPI  at United Nations

Absolute and relative poverty in the UK

This uses a definition of absolute low income by 1999 standards. It shows that real incomes have significantly increased.

• Measures of poverty
• Causes of poverty

Published 24 Nov 2019, Tejvan Pettinger . www.economicshelp.org

Relative vs Absolute Poverty

What is poverty.

In simple terms, poverty is not having enough money or access to resources to enjoy a decent standard of living; be that the lack of access to healthcare, education or water and sanitation facilities etc.

Historically, poverty in the UK was defined as either primary and secondary in studies by Seebhom Rowntree in the 20th century .

• Primary poverty means not having enough money to meet basic needs. It can also be considered as ‘living below the poverty line.’
• Secondary poverty is when people earn just enough money to afford the necessities. But, they spend part of it on “coping mechanisms” to deal with financial and work-related stress. (high risk and/or difficult working conditions due to abuse and long hours) and therefore end up struggling to make ends meet

In the end, Rowntree identified low wages as the main cause of poverty in the UK , rather than the poorest being responsible for their own condition – which was the most common criticism back then (and still is today to some extent).

Understanding the cycle of poverty

Statistics worldwide back this conclusion today, people born into poverty are much more likely to remain poor. Some people might escape it, but for the majority, hard work isn’t the solution when the economic system works against them. This is what constitutes the cycle of poverty.

Not having access to healthy food, decent housing , electricity, water means you effectively live in severe, absolute poverty. And the cost of these things is too high for you to afford them, or at least you can’t afford them all. So, which one do you prioritise?

That’s why finding a definition of relative or absolute poverty isn’t simple since it doesn’t just involve economics, but it is also affected by society and politics. For this reason is poverty a measurable concept? And if yes, should we measure it using a relative approach or an absolute one?

What is relative vs. absolute poverty

Absolute poverty is when household income is below a certain level. This makes it impossible for the person or family to meet basic needs of life including food, shelter, safe drinking water, education, healthcare, etc.

In this state of poverty, even if the country is growing economically it has no effect on people living below the poverty line. Absolute poverty compares households based on a set income level. And this level varies from country to country depending on its overall economic conditions.

Relative poverty is when households receive 50% less than average household incomes. So they do have some money but still not enough money to afford anything above the basics. This type of poverty is, on the other hand, changeable depending on the economic growth of the country.

• Relative poverty is sometimes described as “relative deprivation” because the people falling under this category are not living in total poverty. They are not, however, enjoying the same standard of life as everyone else in the country. It can be TV, internet, clean clothes, a safe home (a healthy environment, free from abuse or neglect), or even education.
• Relative poverty can also be permanent. This means that certain families have absolutely no chance of enjoying the same standards of living as other people in the same society currently have access to. They are basically “trapped” in a low relative income box.

When the relative approach is used to measure poverty, there is another concept that needs to be explored – persistent poverty. This is when households receive 50 or 60% less income than average incomes every 2 out of 3 years. Since long-term poverty has more impactful consequences on economic and social conditions, persistent poverty is an important concept to bear in mind.

Relative poverty is a form of social exclusion

On the whole, poverty is about exclusion . In its most extreme form, it’s the inability to access what you need for a decent life. Relatively speaking, in more developed countries, it’s being excluded from what constitutes normal daily life:

• Internet to access jobs or public services
• The proper clothes to find that job
• Paying for education
• Access to decent housing (respiratory diseases is one of the most common symptoms of poor housing)

Relative poverty depends on the level of development of the country. It’s about giving everyone the chance to enjoy the same living standards so that everyone has an equal opportunity to live their life to their full potential. In that sense, fighting poverty is about unlocking huge, untapped economic potential within each country.

How poverty is measured

To measure whether poverty is absolute or relative you first have to construct thresholds. You must also collate data to calculate the overall number of people who could be considered poor.

Then, when a relative approach is used, a (changeable) level of what households should be able to rely on in order to meet their basic needs is set. And anyone who falls below that is counted in this category.

The absolute method is set at a fixed level that does not change over time. There might be a huge gap between the current level of poverty and the historical standard when this approach is used. Absolute poverty is, therefore, losing its status in the world of economics. Especially in countries where the economy is growing and living standards are rising.

Since the relative approach to measuring poverty uses current data and statistics. It is considered a better and more useful approach. Relative poverty is the main measurement used today because in practice it indicates the number of households that have been “relatively” left behind. Left behind from the households that are currently enjoying a good standard of living.

However, unlike the relative method, the absolute approach helps us to determine whether incomes have increased over time or not. This being said, it does not link the condition with inequality or unfair distribution of resources.

It is for this reason that many economic experts throughout the world suggest that a hybrid approach should be used. Especially for the measurement of poverty in order to pinpoint areas where improvement is possible.

As stated at the beginning, you many think that poverty is simply not having enough money or access to resources to enjoy a decent standard of living, but when further exploring the types, reasons and solutions to do with poverty, you can see it all becomes much more complex.

This post was produced with the financial support of the European Union. Its contents are the sole responsibility of Habitat for Humanity GB and do not necessarily reflect the views of the European Union.

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This report discusses contested concepts that relate to how we might understand poverty from a sociological/social theory perspective. It finds that:

• some sociologists have tended to explain poverty by referring to people’s moral failings, fecklessness or dependency cultures, while others have argued that it can be better understood as a result of how resources and opportunities are unequally distributed across society;
• some sociologists have pointed to the declining influence of social class in the UK, yet research shows that social class and processes of class reproduction remain important – the opportunities open to people are still influenced, to a large extent, by their social class positions;
• sociologists point to the importance of stigma and shame in understanding the experience of poverty; and
• the ways that those experiencing poverty can be negatively stereotyped by institutions such as public or welfare delivery services has also been shown to be important in stigmatising and disadvantaging those experiencing poverty.

This report is one of four reviews looking at poverty from different perspectives.

• Sociological thinking focuses on the structure and organisation of society and how this relates to social problems and individual lives.
• In looking to explain poverty, sociologists have often tried to balance the relative importance of social structures (how society is organised) and the role of individual agency – people’s independent choices and actions.
• Sociologists are interested in how resources in society are distributed.
• Some sociologists, especially those writing in the 1970s and 1980s, have tended to explain poverty by referring to people’s moral failings, fecklessness or dependency cultures. Others have argued that poverty can be better understood as a result of the ways in which resources and opportunities are unequally distributed across society.
• Some sociologists have pointed to the declining influence of social class in the UK. Yet research has shown that social class and processes of class reproduction remain important, particularly for the continuity of poverty over time and across generations.
• On a related topic, sociologists have pointed to the importance of stigma and shame in understanding the experience of poverty. A particular concern is with how the spending patterns of those in the greatest poverty are often subject to stigmatisation.
• The ways in which institutions such as public or welfare delivery services can negatively stereotype those experiencing poverty has also been shown to be important in stigmatising and disadvantaging those experiencing poverty.
• To a large extent, people’s social class positions still influence the opportunities open to them. Starting out life in poverty means a greater risk of poverty in later life.

Much sociological theory is directed at understanding social change. Social theorists throughout history have rarely talked about poverty as such, but nonetheless their insights into the economic ordering and structure of society offer valuable ideas for understanding poverty. Marx and Engels, writing in Victorian Britain, pointed to the stark divide between the impoverished working classes who had nothing to sell but their labour and the capitalist classes who, by virtue of owning the means of production, were able to exploit this labour to their profit.

Sociologist Max Weber, writing around the turn of the 20th century, pointed to the importance not just of economic factors in producing and sustaining inequality, but also the influence of power, status and prestige in perpetuating dominant relations. Emile Durkheim, on the other hand, emphasised the functional necessity of social inequality for the well-being of society. Echoes of these early theoretical ideas can be seen in sociological thinking, to a greater or lesser degree, right up to the present day.

This review analysed sociological theories and concepts on the causes of poverty, focusing on how to understand poverty from a sociological perspective.

Poverty and the ‘undeserving poor’

Much sociological thinking on poverty, especially in the 1970s and 1980s, has revolved around the relative importance of social structures and individual agency in explaining the prevalence and perpetuation of poverty over time. The social and political propensity to mark out some people as being somehow responsible for their own hardship has a long history. In many accounts, particularly popular and political ones but also some academic studies, the emphasis has been on the supposedly ‘undeserving poor’, citing individual behaviours, supposed fecklessness or moral failings as key causes of poverty.

More recently, it has been argued that the welfare system is responsible for encouraging and supporting claimants into welfare dependency. Further recent variations of these ideas point to ‘cultures of worklessness’, ‘troubled families’ or families who have never worked as key explanations for poverty. Sociologists have been keen to use empirical evidence to challenge these dominant, individual and often psychological explanations for poverty. They point to the importance of the broader context and the kinds of opportunities open to people as being more important than individual behaviours and choices in explaining and understanding poverty.

The close association made between poverty and individual behaviours means that it can sometimes be difficult to disentangle poverty from related issues such as unemployment or receipt of welfare. This is especially the case in some current popular and political discourse, which ignores the fact that not all unemployed people are poor and nor are all of those experiencing poverty out of work. The tendency to conflate poverty with other social issues such as unemployment, welfare receipt or substance abuse, or to uncritically cite these conditions as explanations of poverty, is tied up with the tendency to portray poverty as a problem created by those experiencing it. It is also indicative of a more general tendency to downplay the significance of poverty altogether.

The ‘cultural turn’, consumption and social class

Sociologists use the concept of social class extensively in their research, and most agree that social class has an economic base. In recent years, some have argued that social class distinctions have become more complex and fuzzy and less significant for lifestyles and life experiences. It has been suggested that opportunities for identity formation have opened up and become more reflective of individual choice than they were in the past. It is argued that individuals now have greater control over their own destinies. Consumption practices (what people buy and consume) are often cited as a key mechanism by which people can demonstrate their individuality and create their own individual identities.

Consumption, however, has also become an increasingly important element of distinction and stratification. Those experiencing poverty often find it difficult to partake in expected consumption behaviours. Furthermore, wider society often subjects the spending habits and patterns of those in the greatest poverty to stigmatisation.

So, while access to consumption might seem to open up opportunities for people to construct their lifestyles and identities in ways reflecting their own individual preferences and choices, it can also reinforce and support social class divisions and distinctions. Furthermore, social class positioning continues to be an important influence on many, if not all, aspects of people’s lives, including educational attainment, jobs and leisure activities.

Poverty, stigma and shame

Poverty and material deprivation are important drivers of stigma and shame. The depiction of those in poverty as ‘the other’ often occurs through the use of particular language, labels and images about what it means to be in poverty. These processes take place at different levels and in different sections of society. Those working in welfare sectors, for example, might negatively – and mostly mistakenly – point to individual character traits and behaviour when explaining the key reasons for unemployment. This is a process of negatively stereotyping those who are disadvantaged. While these labels are often applied from the top down, towards those experiencing poverty by those who are not, people in poverty can also buy into and perpetuate such stereotypes and stigmatisation. This is the consequence of the pressure those in poverty face to disassociate themselves from the stigma and shame associated with poverty.

Capitalism and the changing labour market

For a long time, successive governments have lauded work as the best route out of poverty. Yet the changing face of the labour market and work itself means that employment is no longer a guaranteed passport away from poverty, if indeed it ever was. In the current context, working conditions for many have worsened, public sector jobs have rapidly declined, unemployment and underemployment have been increasing, and low-paid and part-time work have proliferated. Low-paid work, or ‘poor work’ as it is sometimes referred to, is now an integral and growing aspect of the contemporary labour market. It is a particular problem for those countries which have followed an economy based on aggressive free-market principles. As a result, in-work poverty is an increasingly important explanation for contemporary poverty.

Sociology provides a powerful tool for thinking about poverty. ‘Thinking sociologically’ can help us to better comprehend social issues and problems. It allows us to understand personal troubles as part of the economic and political institutions of society, and permits us to cast a critical eye over issues that may otherwise be interpreted simplistically or misinterpreted. In looking at poverty, myths and misconceptions dominate both popular and political discussions. Sociological thinking can be helpful in trying to disentangle poverty from a range of related concepts and largely pejorative discussions about a variety of social problems.

Some attention has recently been devoted to the discussion of rising inequality. In the current context, economic inequality is getting more extreme, with those at the very top growing ever richer while the majority are finding life increasingly harsh and poverty rates are increasing. Much of the sociological evidence reviewed in this study has been concerned with the reproduction of (social class) inequalities over time. Research has shown that the majority of the British public accept that wealth can buy opportunities, but conversely most also believe in the notion of a meritocracy and that hard work is the best way to get on in life. Yet evidence shows that true equality of opportunity simply does not exist.

Using a framework of inequality (and equality) allows scope to think more closely about issues of class perpetuation and their relationship with poverty. It is not happenchance that countries with low rates of relative income poverty tend to have a strong focus on equality. Sociological theory can alert people to how a growing emphasis on individual responsibility and behaviour might make class inequality and the importance of opportunity structures less obvious. Despite this, it remains the case that where people start out in life continues to have a significant influence on where they are likely to end up. Starting out life in poverty means a greater risk of poverty later on in life.

About the project

This review analysed sociological theories and concepts on the causes of poverty and ways to understand poverty from a sociological perspective. The review was necessarily only partial, as the size of the field under consideration did not allow for a systematic review of all relevant literature. Hence, the review concentrated on what the authors deemed to be the most relevant debates for understanding poverty sociologically.

Poverty Essay for Students and Children

500+ words essay on poverty essay.

“Poverty is the worst form of violence”. – Mahatma Gandhi.

How Poverty is Measured?

For measuring poverty United nations have devised two measures of poverty – Absolute & relative poverty.  Absolute poverty is used to measure poverty in developing countries like India. Relative poverty is used to measure poverty in developed countries like the USA. In absolute poverty, a line based on the minimum level of income has been created & is called a poverty line.  If per day income of a family is below this level, then it is poor or below the poverty line. If per day income of a family is above this level, then it is non-poor or above the poverty line. In India, the new poverty line is  Rs 32 in rural areas and Rs 47 in urban areas.

Get the huge list of more than 500 Essay Topics and Ideas

Causes of Poverty

According to the Noble prize winner South African leader, Nelson Mandela – “Poverty is not natural, it is manmade”. The above statement is true as the causes of poverty are generally man-made. There are various causes of poverty but the most important is population. Rising population is putting the burden on the resources & budget of countries. Governments are finding difficult to provide food, shelter & employment to the rising population.

The other causes are- lack of education, war, natural disaster, lack of employment, lack of infrastructure, political instability, etc. For instance- lack of employment opportunities makes a person jobless & he is not able to earn enough to fulfill the basic necessities of his family & becomes poor. Lack of education compels a person for less paying jobs & it makes him poorer. Lack of infrastructure means there are no industries, banks, etc. in a country resulting in lack of employment opportunities. Natural disasters like flood, earthquake also contribute to poverty.

In some countries, especially African countries like Somalia, a long period of civil war has made poverty widespread. This is because all the resources & money is being spent in war instead of public welfare. Countries like India, Pakistan, Bangladesh, etc. are prone to natural disasters like cyclone, etc. These disasters occur every year causing poverty to rise.

Ill Effects of Poverty

Poverty affects the life of a poor family. A poor person is not able to take proper food & nutrition &his capacity to work reduces. Reduced capacity to work further reduces his income, making him poorer. Children from poor family never get proper schooling & proper nutrition. They have to work to support their family & this destroys their childhood. Some of them may also involve in crimes like theft, murder, robbery, etc. A poor person remains uneducated & is forced to live under unhygienic conditions in slums. There are no proper sanitation & drinking water facility in slums & he falls ill often &  his health deteriorates. A poor person generally dies an early death. So, all social evils are related to poverty.

Government Schemes to Remove Poverty

The government of India also took several measures to eradicate poverty from India. Some of them are – creating employment opportunities , controlling population, etc. In India, about 60% of the population is still dependent on agriculture for its livelihood. Government has taken certain measures to promote agriculture in India. The government constructed certain dams & canals in our country to provide easy availability of water for irrigation. Government has also taken steps for the cheap availability of seeds & farming equipment to promote agriculture. Government is also promoting farming of cash crops like cotton, instead of food crops. In cities, the government is promoting industrialization to create more jobs. Government has also opened  ‘Ration shops’. Other measures include providing free & compulsory education for children up to 14 years of age, scholarship to deserving students from a poor background, providing subsidized houses to poor people, etc.

Poverty is a social evil, we can also contribute to control it. For example- we can simply donate old clothes to poor people, we can also sponsor the education of a poor child or we can utilize our free time by teaching poor students. Remember before wasting food, somebody is still sleeping hungry.

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Difference Between Absolute Poverty and Relative Poverty

Poverty is an economic condition where humans experience a lack of certain commodities essential for stable living.

Absolute Poverty and Relative Poverty are two terms used to measure this poverty level.

Absolute Poverty is used to describe a condition where an individual does not have the financial means to obtain commodities to sustain life.

Relative Poverty refers to the standard of living compared to economic standards of living within the same surroundings.

This article will further highlight the significant differences between absolute poverty and relative poverty within the context of the IAS Exam

Aspirants can find more Difference Between Articles , by visiting the linked page

The difference between Absolute Poverty and Relative Poverty is given in the table below:                                               

Differences between Absolute Poverty and Relative Poverty

The concept of poverty is covered under the Economy segment of the UPSC Exams. Aspirants can find study materials related to this segment with the links given below:

• Causes of Poverty
• Poverty and Hunger
• List of Poverty Alleviation Programmes
• Strategy and Syllabus for UPSC Economics
• Notes for UPSC Indian Economy

Difference Between Absolute Poverty and Relative Poverty: UPSC Notes – Download PDF Here

Frequently Asked Questions about Absolute and Relative Poverty

What is an example of relative poverty, what is an example of absolute poverty.

Candidates can find the general pattern of the UPSC Exams by visiting the UPSC Syllabus page. For more articles and exam-related preparation materials, refer to the links given in the table below:

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Professor Emeritus David Lanning, nuclear engineer and key contributor to the MIT Reactor, dies at 96

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David Lanning, MIT professor emeritus of nuclear science and engineering and a key contributor to the MIT Reactor project, passed away on April 26 at the Lahey Clinic in Burlington, Massachusetts, at the age of 96.

Born in Baker, Oregon, on March 30, 1928, Lanning graduated in 1951 from the University of Oregon with a BS in physics. While taking night classes in nuclear engineering, in lieu of an available degree program at the time, he started his career path working for General Electric in Richland, Washington. There he conducted critical-mass studies for handling and designing safe plutonium-bearing systems in separation plants at the Hanford Atomic Products Operation, making him a pioneer in nuclear fuel cycle management.

Lanning was then involved in the design, construction, and startup of the Physical Constants Testing Reactor (PCTR). As one of the few people qualified to operate the experimental reactor, he trained others to safely assess and handle its highly radioactive components.

Lanning supervised experiments at the PCTR to find the critical conditions of various lattices in a safe manner and conduct reactivity measurements to determine relative flux distributions. This primed him to be an indispensable asset to the MIT Reactor (MITR), which was being constructed on the opposite side of the country.

An early authority in nuclear engineering comes to MIT

Lanning came to MIT in 1957 to join what was being called the “MIT Reactor Project” after being recruited by the MITR’s designer and first director, Theos “Tommy” J. Thompson, to serve as one of the MITR’s first operating supervisors. With only a handful of people on the operations team at the time, Lanning also completed the emergency plan and startup procedures for the MITR, which achieved criticality on July 21, 1958.

In addition to becoming a faculty member in the Department of Nuclear Engineering in 1962, Lanning’s roles at the MITR went from reactor operations superintendent in the 1950s and early 1960s, to assistant director in 1962, and then acting director in 1963, when Thompson went on sabbatical.

In his faculty position, Lanning took responsibility for supervising lab subjects and research projects at the MITR, including the Heavy Water Lattice Project. This project supported the thesis work of more than 30 students doing experimental studies of sub-critical uranium fuel rods — including Lanning’s own thesis. He received his PhD in nuclear engineering from MIT in fall 1963.

Lanning decided to leave MIT in July 1965 and return to Hanford as the manager of their Reactor Neutronics Section. Despite not having plans to return to work for MIT, Lanning agreed when Thompson requested that he renew his MITR operator’s license shortly after leaving.

“Because of his thorough familiarity with our facility, it is anticipated that Dr. Lanning may be asked to return to MIT for temporary tours of duty at our reactor. It is always possible that there may be changes in the key personnel presently operating the MIT Reactor and the possible availability of Dr. Lanning to fill in, even temporarily, could be a very important factor in maintaining a high level of competence at the reactor during its continued operation,” Theos J. Thompson wrote in a letter to the Atomic Energy Commission on Sept. 21, 1965

One modification, many changes

This was an invaluable decision to continue the MITR’s success as a nuclear research facility. In 1969 Thompson accepted a two-year term appointment as a U.S. atomic energy commissioner and requested Lanning to return to MIT to take his place during his temporary absence. Thompson initiated feasibility studies for a new MITR core design and believed Lanning was the most capable person to continue the task of seeing the MITR redesign to fruition.

Lanning returned to MIT in July 1969 with a faculty appointment to take over the subjects Thompson was teaching, in addition to being co-director of the MITR with Lincoln Clark Jr. during the redesign. Tragically, Thompson was killed in a plane accident in November 1970, just one week after Lanning and his team submitted the application for the redesign’s construction permit.

Thompson’s death meant his responsibilities were now Lanning’s on a permanent basis. Lanning continued to completion the redesign of the MITR, known today as the MITR-II. The redesign increased the neutron flux level by a factor of three without changing its operating power — expanding the reactor’s research capabilities and refreshing its status as a premier research facility.

Construction and startup tests for the MITR-II were completed in 1975 and the MITR-II went critical on Aug. 14, 1975. Management of the MITR-II was transferred the following year from the Nuclear Engineering Department to its own interdepartmental research center, the Nuclear Reactor Laboratory , where Lanning continued to use the MITR-II for research.

Beyond the redesign

In 1970, Lanning combined two reactor design courses he inherited and introduced a new course in which he had students apply their knowledge and critique the design and economic considerations of a reactor presented by a student in a prior term. He taught these courses through the late 1990s, in addition to leading new courses with other faculty for industry professionals on reactor safety.

Co-author of over 70 papers , many on the forefront of nuclear engineering, Lanning’s research included studies to improve the efficiency, cycle management, and design of nuclear fuel, as well as making reactors safer and more economical to operate.

Lanning was part of an ongoing research project team that introduced and demonstrated digital control and automation in nuclear reactor control mechanisms before any of the sort were found in reactors in the United States. Their research improved the regulatory barriers preventing commercial plants from replacing aging analog reactor control components with digital ones. The project also demonstrated that reactor operations would be more reliable, safe, and economical by introducing automation in certain reactor control systems. This led to the MITR being one of the first reactors in the United States licensed to operate using digital technology to control reactor power.

Lanning became professor emeritus in May 1989 and retired in 1994, but continued his passion for teaching through the late 1990s as a thesis advisor and reader. His legacy lives on in the still-operational MITR-II, with his former students following in his footsteps by working on fuel studies for the next version of the MITR core. 

Lanning is predeceased by his wife of 60 years, Gloria Lanning, and is survived by his two children, a brother, and his many grandchildren .

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