Loading the player...

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.


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.

  1. International Poverty Line

    The intentional poverty line is a metric used globally to determine ...
  2. Great Society

    Great Society was a set of programs created in the turbulent ...
  3. Pension Pillar

    A pension pillar is one of five pension formats established by ...
  4. Economic Collapse

    An economic collapse is a prolonged breakdown of a country's ...
  5. Social Economics

    Social economics is a branch of economics that focuses on the ...
  6. First World

    "First world" is a term that describes industrialized, democratic ...
Related Articles
  1. Insights

    America's Poorest States in 2015

    Learn the reasons Mississippi, New Mexico, Louisiana, Georgia and Kentucky are the poorest states in the United States, as of 2015.
  2. Insurance

    Why Being Poor Is So Expensive

    The less you earn, the more you're likely to spend for the everyday necessities of life.
  3. Personal Finance

    The Minimum Wage: Does It Matter?

    The numbers show that a fight for a living wage is more important than a fight for a raise in minimum wage.
  4. Personal Finance

    How Minimum Wage Impacts Unemployment

    We explain how the minimum wage affects unemployment, public assistance, and the economy overall.
  5. Insights

    The Worst Cities for Financial Advisors

    Financial advisors may want to avoid low income areas or those with lofty wealth but high numbers of advisors.
  6. Insights

    Can A State Really Secede?

    With America's debt, poverty and unemployment on the rise, some states may want to become their own republic. Find out if they can actually secede.
  7. Insights

    World Bank Data For Dummies

    Developing countries can't always afford to track the data crucial to setting the right economic policies and programs. That's where the World Bank steps in.
  8. Tech

    Why Advisors Shouldn't Overlook Impact Investing

    The demand for impact-centered portfolio management is rapidly growing. Here's how advisors can get on the bandwagon with this new approach.
  9. Investing

    Next Financial Crisis Is a ‘Certainty’: Bill Gates

    The former Microsoft CEO sees another crisis as inevitable but also sees long-run improvement.
  10. Insights

    Top 25 Developed and Developing Countries

    The difference between developed and developing countries, along with a list of the status of 25 nations around the world.
  1. Is Mexico an emerging market economy?

    Learn the difference between a developed economy and an emerging market economy, and understand why Mexico is an emerging ... Read Answer >>
  2. The Difference Between the International Monetary Fund and the World Bank

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ... Read Answer >>
  3. Why is social responsibility important to a business?

    Socially responsible companies improve their brand, attract and retain top talent, and improve relationships with their customers ... Read Answer >>
  4. How is the cost of living index calculated?

    Discover how calculations for cost of living indexes are made based on the average prices of common goods and services between ... Read Answer >>
  5. How does the current cost of living compare to 20 years ago?

    Find out how inflation has affected the dollar since 1998, and how the cost of living has changed above and beyond what can ... Read Answer >>
  6. How can industrialization affect the national economy of less developed countries ...

    Read about how industrialization impacts economic growth in less developed countries (LDCs), using Hong Kong and Great Britain ... Read Answer >>
Trading Center