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What is 'Poverty'

Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.

BREAKING DOWN 'Poverty'

Poverty status in the United States is assigned to people that do not meet a certain threshold level set by the Department of Health and Human Services (HHS). Poverty rates in the United States, the percentage of U.S. population with poverty status, are calculated by the U.S. Bureau of Census, and precludes institutionalized people, people living in military quarters, those living in college dormitories and individuals under the age of 15. Poverty rates important statistics to follow for global investors, as a high poverty rate is often indicative of greater problems within a country. As of 2016 Census figures, more than 40 million people in the U.S. live below the poverty line. A family is counted as poor if its pretax money income, excluding noncash benefits, is below its poverty threshold. For example, for two adults and two children, the threshold is about $24,000. For a single adult over 65, it is about $11,000.

Poverty has decreased in developed countries since the industrial revolution. Increased production reduced the cost of goods, making them more affordable. Advancements in agriculture increased crop yields, and so food production. Since the mid 1990s, 95 percent of global poverty has been concentrated in East Asia, South Asia and Sub-Saharan Africa.

Consequences of poverty

The United Nations and the World Bank are major advocates in reducing world poverty. The World Bank has an ambitious target of eradicating poverty by 2030. For this to be achieved, communities would need to collaborate to implement strategies that improve living conditions for the world’s poor. Actions include installing wells that provide access to clean drinking water; educating farmers how to produce more food; constructing shelter for the poor; building schools to educate disadvantaged communities and providing enhanced access to better health care services by building medical clinics and hospitals.

Access to good schools, healthcare, electricity, safe water and other critical services remains elusive for many, and is often determined by socioeconomic status, gender, ethnicity, and geography. For those able to move out of poverty, progress is often temporary: economic shocks, food insecurity and climate change threaten their gains and may force them back into poverty. This is because poverty is a difficult cycle to break, often passed from one generation to the next. Typical consequences of poverty include alcohol and substance abuse; less access to education; poor housing and living conditions and increased levels of disease. Heightened poverty is likely to cause increased tensions in society as inequality increases. These issues often lead to rising crime rates in communities affected by poverty.

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