What Is Poverty?
The question of defining poverty hinges on the question, "Who
is actually poor?" It would be convenient if we all identified
poverty in the same way. We can look at certain extreme examples
and easily agree that some particular people are poor. But the
difficulty is in drawing the line between those who are poor
and those who are not.
This question is not just an intellectual exercise or argument
about social classes. It matters greatly how we decide who is
poor, especially when we want to help alleviate poverty. After
all, every dollar that a government spends on those who do not
need it could have gone to those who really do need it.
In general, there are three basic ways in which poverty is
1. The relative definition.
2. The bureaucratic definition.
3. The functional definition.
These ways each have their elements of subjectivity, so even
if we agree on a basic approach to defining poverty we may not
easily agree on the definition. But the differences in approach
are important in any case, so let's look at them one at a time.
It is likely that if someday we are all wealthy by today's
standards, we will still refer to some people in society as poor.
This is because the most common way we define poverty is by comparison.
Those who - compared to the majority of people around them -
have less wealth and make less money - are called poor. The relativeness
of this approach to defining poverty can be seen easily if we
take a historical perspective.
Consider the kings of past centuries, who despite all their
wealth had no flush toilets, proper medical care, or even the
ability to heat their castles sufficiently for comfort in the
winter. Then think about a modern family in the United States
that is called poor despite having all these things the king
lacked, along with large televisions and other things past kings
could not even imagine. Poverty, as a concept, obviously develops
over time, and often refers simply to those who make the least
in a society, regardless of their actual circumstances.
In some respects this is inevitable, and we can't entirely
discard this relative defining of poverty. It will influence
the other definitions, as we shall see, and this is appropriate
to some extent. It is easy to imagine that there is a level of
income beyond which more adds nothing to a person's well-being,
but if there is, it is far beyond our common ideas about this,
and not likely to ever be achieved by everyone. Having more televisions
and other things may not improve life, but it can be argued that
there is endless improvement available in some areas, and so
people will always be "left behind" in some sense,
and so subject to this definition of poverty.
For example, there can be better and better medical care.
This suggests that someday when what is the best medical care
known today is surpassed by something better, and some people
can't afford the new higher level of care, they will be considered
poor on this basis. That's true even if they are considered middle
class today at the same income level. The same might be said
of education. At some point, when most people have virtually
unlimited educational opportunities, it may then be a sign of
poverty if a person can't afford to spend the first thirty years
of life in various schools and universities.
We might argue about the second example, since it is more
difficult to prove that more education really does improve life
in every case. But to spell out the significance of the first
example, imagine that a new treatment can cure every single type
of cancer, but costs thirty million dollars. Add to that the
assumption that this happens in a wealthy future when almost
everyone can afford the costs of that treatment. Now who wouldn't
think it a shame if a few people had to die because the treatment
just cost too much. We can easily imagine thinking of that as
Though there may be an appropriate use of relative poverty
as a concept, for the reason given above, for the most part it
isn't all that useful to think of poverty in this way. If we
consider people in our societies poor only because they are making
less than most of us, we will tend to forget that there are other
in the world who are actually dying from poverty on a daily basis.
Some of us would argue that it's better to use our tax dollars
to save a truly poor child in the Appalachian mountains from
nutritional deficiencies, or even to save a foreign life than
to upgrade the possessions or lifestyle of those who have the
essentials of life and are poor only by comparison to the wealthy
or middle class.
For the sake of welfare programs, foreign aid, and other government
measures to help the poor, there needs to be a clear definition
of poverty. For those who deal with poverty around the world,
it is common to use standards like "a dollar or less per
day per person" as a measure of extreme poverty, and two
dollars as the cut-off for poverty in general. The United States
government defines poverty for a family of four (as of 2010)
in the lower forty-eight states as under $22,000 per year, or
about $15 per day per person.
This kind of definition by numbers is convenient. It also
hides a lot of truth about the actual situations of each family
or individual. Some are suffering when making only $22,000 per
year, while others are doing just fine making far less. When
my wife and I first married, we made less that half of the poverty
level, but required no help. Why? Because we lived in a home
in which the mortgage was paid off and had few other expenses.
We didn't like being that "poor," but we had the essentials
of life, and even enough to travel the country looking for a
better place to live.
It might seem that there has to be a simple definition by
the numbers in order to efficiently run various programs designed
to combat poverty. After all, how else would we choose who gets
help? But there is a better way, which we'll look at next.
In his book, Creating a World Without Poverty, Muhammad
Yunus suggests that we need to clearly define poverty and the
measures that will indicate it has been overcome. He also thinks
these should be different for each area of the world, depending
on many factors. In other words, the question "What is poverty?"
has a different answer in each country, or even each area of
He proposes that the defining measurements and associated
goals should be based on specific living conditions more than
just income level. Here is the list of ten signs that his Grameen
Bank looks for to determine that a family is out of poverty.
"1. The bank member and her family live in a tin-roofed
house or a house worth at least 25,000 taka (roughly equivalent
to $370). The family members sleep on cots or a bedstead rather
than on the floor.
2. The member and her family drink pure water from tube wells,
boiled water, or arsenic-free water purified by the use of alum,
purifying tablets, or pitcher filters.
3. All of the member's children who are physically and mentally
fit and above the age of six either attend or have finished primary
4. The members minimum weekly loan repayment installment is
200 taka (around $3).
5. All family members use a hygienic and sanitary latrine.
6. All family members have sufficient clothing to meet daily
needs, including winter clothes, blankets, and mosquito netting.
7. The family has additional sources of income, such as a
vegetable garden or fruit-bearing trees, to fall back on in times
8. The member maintains an average annual balance of 5,000
taka (around $75) in her savings account.
9. The member has the ability to feed her family three square
meals a day throughout the year.
10. All family members are conscious about their health, can
take immediate action for proper treatment, and can pay medical
expenses in the event of an illness."
This is what I call a functional definition of poverty. It
makes perfect sense that poverty is something different in different
parts of the world, and this is not just a matter of relativity,
although that plays a role. To give a simple example, it can
be a sign of poverty to have no heating system in your home if
you live in northern Minnesota, but this is almost meaningless
in many warmer places with climates.
This also allows for more creativity in addressing poverty,
and ultimately more efficiency. For example, if one family has
the space and inclination to grow a large garden, they might
meet a proportion of their food needs in this way, and so need
less financial help - which means that money can go where it
is more needed. In fact, the poor in rural areas who lack sufficient
employment and so have time, might be helped to grow gardens
as a cheaper means of providing food than simply giving them
the money to go to the grocery store.
In the United States, we might normally help the poor with
medical care by paying existing providers, but if we look at
this not as an income problem, but as a question of the care
itself, we may find better alternatives. For example, if poverty
- or at least this aspect of it - is concentrated in an area,
it might cost less to build a government-funded clinic than to
pay existing providers for all the care needed in that area.
Also, when we look at the situation as not just a matter of
low income, but of the actual conditions we think this leads
to, we can address some of the root causes of poverty more effectively.
For example, some people are poor in part because they struggle
with transportation issues. They may lose jobs or at least some
work income whenever large unexpected car repairs prevent them
from getting to work. They must spend a large part of their income
owning and operating a car to get to and from work. A bus system
that is perhaps free to those who choose not to own a car might
be cheaper than the welfare checks that are otherwise necessary
or larger than they need to be.
A functional approach to looking at poverty also allows us
to address causes that are based on behavior. Some people may
feel uncomfortable discussing this, but it is evident that poverty
can be in part because of the choices made by some poor people.
For example, suppose we use only the "definition by the
numbers" or bureaucratic approach to poverty, and find that
the children in a given family are not getting proper nutrition.
Seeing that this family falls below some arbitrarily-chosen income
level, we assume this is cause of the children's lack of proper
food. But what if we look closer at what is actually happening
in the household? We may discover that the more important problem
is poor financial planning.
For example, years ago a poor friend was paying $25 per week
for a set of bunk beds and a dresser for her children, and would
be paying that for many months to come, perhaps spending $500
in total. I bought her a nicer set used for $25 total and had
her return the other set. She just hadn't thought carefully about
the true cost of the rent-to-own furniture nor about the availability
of high-quality items at thrift stores. Rent-to-own anything
is about the most expensive way for the poor to furnish a home,
and there are almost always better alternatives.
Applied to the situation of the under-nourished children described
previously, $25 weekly would easily resolve any nutritional deficiencies.
Bad financial habits are found in families throughout all levels
of income, but the poor are the ones who would benefit most from
learning how to better handle what little income and resources
they have. Education, then, can be far more efficient in cases
like these than just continuing to pay to cover the cost of mistakes
When we look at and define poverty from a functional perspective,
we ask questions about more than just income levels. In looking
at the housing the poor have, we might look beyond just the cost
and the presumed income needed to afford that. We might ask,
Why do the poor in some areas have such substandard housing?
What is substandard or dangerously deficient housing?
What causes have contributed to that situation?
Why is housing better and cheaper in some places?
What can be done to correct the problems or introduce new
We might investigate these issues and find that high property
taxes are a primary reason for high rents. Regulations requiring
a minimum amount of square footage keeps smaller cheaper homes
out of some areas as well. Some landlords may be hesitating to
improve old houses because of the permits and fees required as
well - and all those costs would have to be passed on the the
renters in any case. We can see from these examples that there
may be ways to alleviate poverty without handing out checks.
If the poor can pay $100 less for rent each month because of
changes made in laws and regulations, they are effectively $100
richer in monthly income.
In the United States, using this functional defining of poverty,
we might say that a person or family is poor if they regularly
lack any of the following:
Clean water for drinking, hygiene and washing.
Sufficient clothing appropriate to the environment.
Sufficient amount of healthy foods.
Sanitary bathroom facilities.
Shelter that allows a healthy environment.
Access to suitable transportation for employment and basic needs.
Education through high school.
Basic health care.
Sufficient income to save for unexpected expenses.
I once knew a man who lived in a house without electricity
or running water. He chose to live this way. He had a hand-pumped
well which provided clean water for all his needs. He had a large
garden and goats for milk, and enough occasional income so he
never lacked sufficient food. He kept clean and had a bathroom
apart from the house. His car was rarely used, but was available
when he needed it. He could get health care when he needed it
through various clinics and programs. He had a coffee can with
cash in it for emergencies, and collected antiques that could
be sold if he needed more cash.
This man's total income in some years was less than a seven
hundred dollars, which certainly fit the government definition
of poor in the United States, where he lived. In fact, even by
standards of poorer countries in the world, he was living in
poverty. But he had all the necessities of life, and this is
an important point, especially in this case, as I will explain.
This man was perfectly capable of working for a living, but
for years he did nothing more than the occasional odd job. That
wouldn't necessarily have been a problem, given his limited needs.
His house was hand-built and property taxes were less than $100
per year. He grew much of his food and didn't seem to care how
old his clothes were. He had a winter coat and unlimited heat
in the form of firewood that he cut from the surrounding woods.
At some point, though, he discovered how to get food stamps
and other welfare benefits. He certainly qualified according
to the formulas and definitions of the bureaucracies. The money
and even the food stamps - which he sold to get more money -
were used to feed his habits, which included marijuana, tobacco
and alcohol. The money that went to this man - who didn't need
it and chose to live the way he did in any case - could have
been used to help someone who really needed it.
Not only was that money not used in better ways, but it encouraged
bad habits in its recipient while discouraging his seeking employment.
He did eventually get tired of the lifestyle and started working
at a relatively high-paying job for which he had been qualified
for years. Without the "help" of government he would
have almost certainly become a tax-paying worker sooner.
That is an example of what can happen when we try to over-simplify
our understanding of poverty with easy definitions. Poverty is
not a function of assets or income alone, nor are the problems
of the poor easily solved by money, because no country has an
unlimited supply of wealth and income. We need to look at what
constitutes real need and what causes contribute to it - and
then work from that understanding - if we want to end poverty.