All over the world, disparities between the rich and poor, even in the wealthiest of nations is rising sharply. Fewer people are becoming increasingly “successful” and wealthy while a disproportionately larger population is also becoming even poorer. There are many issues involved when looking at poverty. It is not simply enough to say that the poor are poor due to their own bad governance and management. Poverty is everywhere and it needs to be reduced so that our economy will be more stabilized and balanced that it has been. By definition, Poverty is an economic condition of lacking both money and basic necessities needed to successfully live such as food, water, education, and shelter. Those who live in conditions of poverty lack a wide range of economic and other resources and may be described as poor or impoverished. Some see the term as subjective and comparative, others see it as moral and evaluative, while others consider that it is scientifically established

Measuring poverty

Although the most severe poverty is in the developing world, there is evidence of poverty in every region. Poverty may be seen as the collective condition of poor people, or of poor groups, and in this sense entire nation-states are sometimes regarded as poor. When measured, poverty may be absolute or relative poverty. Absolute poverty refers to a set standard which is consistent over time and between countries. An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body (approximately 2000-2500 kilocalories per day). Absolute poverty is a condition that applies to people with the lowest incomes, the least education, the lowest social status, the fewest opportunities, etc. The extent to which growth reduces global poverty has been disputed for 30 years. Although there is better data than ever before, controversies are not resolved. A major problem is that consumption measured from household surveys, which is used to measure poverty, grows less rapidly than consumption measured in national accounts, in the world as a whole, and in large countries, particularly India, China, and the US. In consequence, measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries. One plausible cause is that richer households are less likely to participate in surveys. But growth in the national accounts is also upwardly biased, and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys. So it is possible for consumption of the poor to grow less rapidly than national consumption, without any increase in measured inequality. Current statistical procedures in poor countries understate the rate of global poverty reduction, and overstate growth in the world. The World Bank defines extreme poverty as living on less than US$ (PPP) 1 per day, and moderate poverty as less than $2 a day. It has been estimated that in 2001, 1.1 billion people had consumption levels below $1 a day and 2.7 billion lived on less than $2 a day. The proportion of the developing world's population living in extreme economic poverty has fallen from 28 percent in 1990 to 21 percent in 2001. Much of the improvement has occurred in East and South Asia. In Sub-Saharan Africa GDP/capita shrank with 14 percent and extreme poverty increased from 41 percent in 1981 to 46 percent in 2001. Other regions have seen little or no change. In the early 1990s the transition economies of Europe and Central Asia experienced a sharp drop in income. Poverty rates rose to 6 percent at the end of the decade before beginning to recede. Other indicators of absolute poverty are also improving. Life expectancy has greatly increased in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Even in Sub-Saharan Africa, the least developed region, life expectancy increased from 30 years before World War II to about a peak of about 50 years before the AIDS pandemic and other diseases started to force it down to the current level of 47 years. Child mortality has decreased in every developing region of the world. The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000. The percentage of children not in the labor force has also risen to over 90% in 2000 from 76% in 1960. There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water. Relative poverty views poverty as socially defined and dependent on social context. In this case, the number of people counted as poor could increase while their income rise. A relative measurement would be to compare the total wealth of the poorest 1/3 of the population with the total wealth of richest 1% of the population. There are several different income inequality metrics, one example is the Gini coefficient. Relative poverty is a condition that is measured by comparing one group’s situation to the situations of those who are more advantaged. In many developed countries, the official definition of poverty used for statistical purposes is based on relative income. As such many critics argue that poverty statistics measure inequality rather than material deprivation or hardship. Furthermore, they are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on "economic distance", a level of income set at 50% of the median household income. The US poverty line is more arbitrary. It was created in 1963-64 and was based on the dollar costs of the U.S. Department of Agriculture's "economy food plan" multiplied by a factor of three. The multiplier was based on research showing that food costs then accounted for about one third of the total money income. This one-time calculation has since been annually updated for inflation. Income inequality for the world as a whole may be diminishing. Even if poverty may be lessening for the world as a whole, it continues to be an enormous problem:

• One third of deaths – some 18 million people a year or 50,000 per day – are due to poverty-related causes. That's 270 million people since 1990, the majority women and children, roughly equal to the population of the US.
• Every year nearly 11 million children die before their fifth birthday.
• 800 million people go to bed hungry every night.
• The three richest people in the world control more wealth than all 600 million people living in the world's poorest countries.

This paper compares a standard expenditure-based poverty measure with a specifically created composite measure of deprivation using household survey data from South Africa while there is a strong overall correlation between expenditures and levels of deprivation; the correlation is much weaker among the worst-off South Africans. In addition, the two measures differ considerably in the impact of race, headship, location (urban, rural), and household size on expenditure poverty versus deprivation. In general, the deprivation measure finds more Africans, rural dwellers, members of de facto female-headed households, and members of smaller households deprived than expenditure poor. Only the differences in the effect of household size on poverty are sensitive to assumptions about equivalence scales. As a result, the two measures diverge greatly in identifying the poorest and most deprived sections of the population, which may have considerable consequences for targeting.

Causes of poverty

Robert Kaestner examined the effect of drug use on poverty. The main objective of the paper is to provide descriptive empirical information about the relationship between drug use and poverty, and to explore, in a preliminary fashion, the question of whether drug use causes poverty. Toward this end, I present the results of both descriptive and multivariate analyses of the relationship between drug use and poverty for two national samples of young adults. One sample is drawn from the National Household Survey of Drug Abuse (NHSDA), and the other from the National Longitudinal Survey of Youth (NLSY). The results of the analysis indicate that for both samples, drug use is associated with greater poverty.

Many different factors have been cited to explain why poverty occurs. However, no single explanation has gained universal acceptance at all. The factors that have been alleged to cause poverty include the following:

• State discrimination and corruption. Abuse of public power.
• Lack of social integration. Competition instead of cooperation.
• Crime
• Substance abuse
• Procrastination
• Natural factors such as climate or environment.
• Historical factors, for example imperialism and colonialism.
• Overpopulation. Note that population growth slows or even become negative as poverty is reduced due to the demographic transition.
• War, including civil war, genocide, bullying, democide, and politicide.
• Lack of education.
• Lack of social skills.
• Matthew effect— the phenomenon, widely observed across advanced welfare states, that the middle classes tend to be the main beneficiaries of social benefits and services, even if these are primarily targeted at the poor.
• Cultural causes, which attribute poverty to common patterns of life, learned or shared within a community. For example, some have argued that Protestantism contributed to economic growth during the industrial revolution.
• Individual beliefs, actions and choices.
• Mental diseases and disability, such as Autism, and Schizophrenia.
• Excessive materialism
• Lack of freedom

Acute causes of poverty

Warfare  The material and human destruction caused by warfare is a major development problem. For example, from 1990 to 1993, the period encompassing Desert Storm, per capita GDP in Iraq fell from $3500 to $761. The drop in average income, while a striking representation of the drop in the well-being of the average Iraqi citizen in the aftermath of the war, fails to capture the broader affects of damages to the infrastructure and social services, such as health care and access to clean water. Agricultural cycles  People who rely on fruits and vegetables that they produce for household food consumption often go through cycles of relative abundance and scarcity. For many families that rely on subsistence production for survival, the period immediately prior to harvest is a 'hungry period.' During these periods of scarcity, many families lack sufficient resources to meet their minimal nutritional needs. Being familiar with these cycles has enabled development practitioners to anticipate and prepare for periods of acute need for assistance. Natural disasters  Natural disasters such as droughts, floods, hurricanes and earthquakes have devastated communities throughout the world. Developing countries often suffer much more extensive and acute crises at the hands of natural disasters, because limited resources inhibit the construction of adequate housing, infrastructure, and mechanisms for responding to crises. “Rural Poverty And Its Causes In China” explains the causes of poverty in rural China in a variety of ways. These explanations include poor natural endowments, a high dependency ratio and inadequate capital and education. These explanations are examined using a unique set of survey data.

Economic growth

• The anti-poverty strategy of the World Bank depends heavily on reducing poverty through the promotion of economic growth. However, some consider this approach does not actively or directly work to reduce or eliminate poverty.

The World Bank argues that an overview of many studies show that:

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  • Growth is fundamental for poverty reduction, and in principle growth as such does not seem to affect inequality.
  • Growth accompanied by progressive distributional change is better than growth alone.
  • High initial income inequality is a brake on poverty reduction.
  • Poverty itself is also likely to be a barrier for poverty reduction; and wealth inequality seems to predict lower future growth rates.
• Research on the Index of Economic Freedom suggests that a set of economic conditions which have been termed "economic freedom" help increase growth and reduce poverty.
• Business groups see the reduction of barriers to the creation of new businesses, or reducing barriers for existing business, as having the effect of bringing more people into the formal economy.

This paper traces the links from trade shocks to poverty in developing countries. It considers the determinants of household and individual welfare  and then identifies six trade-to-poverty links: the extent to which prices change and the effect of changes on the poor; links via factor markets; changes in government revenue and expenditure; changes in risk and vulnerability; effects on economic growth; and adjustment strains. There are no general results, but among the most important issues to check in each case are: whether trade reform destroys markets or creates new ones, how it affects the ability to bear risk, how labor demand shocks divide between wage and employment effects, and the country's comparative advantage.

Direct aid

• The government can directly help those in need. This has been applied in most Western societies during the 20th century in what became known as the welfare state. Especially for those most at risk, such as the elderly and people with disabilities. The help can be for example monetary or food aid.
• Private charity. This is often formally encouraged within the legal system. For example, charitable trusts and tax deductions for charity.
• Affordable housing development and urban regeneration.
• Affordable education.
• Affordable health care.
• Providing help in finding employment.
• Subsidizing employment of groups that have difficulty finding work otherwise.
• Encouraging political participation and community organizing.

The vast majority of Americans work for a living. The track record of different states varies widely when it comes to providing decent opportunities for working people. The Work Environment Index WEI captures these differences and provides a basis for evaluating how well each state does in creating an economy that supports its working population. The purpose of this article is to detail the construction of the WEI and to explain the design of the Index. This paper serves as a technical companion to the report Decent Work In America: The 2005 Work Environment Index. Many factors contribute to a good environment for working people: quality jobs, adequate opportunities for employment, basic social protections, and being treated fairly. The WEI is a composite measure of these different dimensions and provides a basis for comparing the quality of the work environment in all 50 states and the District of Columbia. The WEI has multiple objectives: 1) To capture and quantify the various dimensions of the work environment on a s tate-by-state basis. 2) To provide a direct, relatively transparent, and easy-to-understand measurement that is firmly rooted in publicly available data sources. 3) To provide a basis for making comparisons between the states that are fair and objective. 4) To create a tool for analyzing other socio-economic issues at the state level: e.g. poverty rate differentials, job quality and quantity trade-offs, and patterns of economic growth.

Millennium Development Goals

Eradication of extreme poverty and hunger by 2015 is a Millennium Development Goal. In addition to broader approaches, the Sachs Report proposes a series of "quick wins", approaches identified by development experts who would cost relatively little but could have a major constructive effect on world poverty. The quick wins are:

• Eliminating school fees.
• Providing soil nutrients to farmers in sub-Saharan Africa.
• Free school meals for schoolchildren.
• Providing mosquito nets.
• Ending user fees for basic health care in developing countries.
• Access to information on sexual and reproductive health.
• Drugs for AIDS, tuberculosis and malaria.
• Upgrading slums, and providing land for public housing.
• Access to electricity, water and sanitation.
• Legislation for women’s rights, including rights to property.
• Action against domestic violence.
• Appointing government scientific advisors in every country.
• Planting trees.

Other approaches

Most developed nations send some aid to developing nations. Polls have shown that, on average, Americans believe that 24% of the federal budget goes to development assistance. In reality, less than 1% of the budget goes to this. Some argue for a radical change of the economic system. There are several proposals for a fundamental restructuring of existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups: socialism, communism, anarchism, libertarianism and participatory economics, among others.

Debates about poverty

The underlying causes of poverty and the elimination thereof are a controversial, politicized issue. Those with right wing views may consider that poverty results from personal choices or preferences, the breakdown of "traditional values", lack of birth control, and over-interference by government. They may also look to structural factors that prevent economic growth, such as poorly protected property rights, lacking credit system, crime, bullying, and corruption. Those with more left wing views typically see poverty as the result of many systemic factors unrelated to personal choices or preferences. For instance, they consider that poverty is caused by lack of opportunity (particularly in education), and that it is often the lack of government intervention which results in more poverty. They tend to believe that alleviating poverty is a matter of social justice and that it is the responsibility of the wealthy to help those in need. The condition in itself is not always considered negatively, even if this is the prevalent interpretation within a given society: some cultural or religious groups consider poverty an ideal condition in which to live, for an example; a condition necessary in order to reach certain spiritual, moral, or intellectual states. Poverty in this sense is understood as the lack of material possessions, and it is regarded in some branches as one of the counsels of perfection. For some orders this is equivalent to voluntary simplicity: Mother Teresa said that a vow of poverty "frees us from all material possessions". However, a vow of poverty traditionally goes beyond that.