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Poverty and Development

Poverty and Development (3rd edn)

Tim Allen and Alan Thomas
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p. 272. Poverty and Inequalitylocked

p. 272. Poverty and Inequalitylocked

  • Naila Kabeer
  •  and Alan Thomas


This chapter examines a range of different ways of determining whether or not someone is 'poor' in an absolute sense, before discussing poverty in relative and cultural terms and the related idea of inequality. Income poverty has many limitations as a measure of poverty. Other ways of conceiving and measuring the poverty of individuals include: taking gender and other inequalities into account within and between households; relative poverty or social exclusion; poverty as a deprivation of capabilities; and incorporating multiple dimensions of deprivation. Poverty is also applied to whole communities, regions, or countries. Two main contrasting ways of measuring poverty at these levels are gross national income (GNI) per capita and the Multidimensional Poverty Index (MPI). Globally, patterns of poverty and inequality are changing so that the majority of poor people no longer live in poor countries as measured by GNI per capita. Global poverty also has to be considered alongside social disintegration and environmental destruction as interrelated issues and parts of a 'global crisis'.

2.1 Introduction

The headline first UN SDG is simply to end poverty (Figure 2.1).

Figure 2.1 SDG 1 ‘End poverty in all its forms everywhere’.

Source: © United Nations 2019, Sustainable Development Goals.

It is not so simple in practice even to be sure what is meant by ‘ending poverty’. There are many different meanings of poverty and ways of measuring it. From Chapter 1, poverty is a condition or state of being applied to certain individuals. This chapter starts by introducing a range of different ways of determining whether or not someone is ‘poor’ in an absolute sense, before discussing poverty in relative and cultural terms and the related idea of inequality.

As well as poverty being a property of individuals, development discourse often treats whole communities or countries as ‘poor’. The chapter goes on to explore how poverty and inequality are measured at this level, and the different ways of doing so, before concluding with brief discussions of global patterns of poverty and inequality and poverty as one of several interrelated major global issues.

What are the limitations of measuring the poverty of individuals and households in terms of low income, and how can broader conceptions of what is meant by poverty be taken into account?

What are the implications of considering the incidence of poverty at a societal or national level, and how does it relate to different forms of inequality?

What are the overall dimensions of poverty, how do they relate to other global problems, and is there a sense in which this constitutes a ‘global crisis’?

2.2p. 28 Income poverty and its limitations

Extreme poverty and the international poverty line

Of the targets within the first SDG (Table 2.1), the first is to ‘eradicate extreme poverty’ by 2030.

Table 2.1 Targets and indicators within SDG 1 (as agreed in 2016).



1.1 By 2030, eradicate extreme poverty for all people everywhere, currently [2016] measured as people living on less than $1.25 a day

1.1.1 Proportion of population below the international poverty line, by sex, age, employment status, and geographical location (urban/rural)

1.2 By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions

1.2.1 Proportion of population living below the national poverty line, by sex and age

1.2.2 Proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions

1.3 Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

1.3.1 Proportion of population covered by social protection floors/systems, by sex, distinguishing children, unemployed persons, older persons, persons with disabilities, pregnant women, newborns, work-injury victims, and the poor and the vulnerable

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

1.4.1 Proportion of population living in households with access to basic services

1.4.2 Proportion of total adult population with secure tenure rights to land, with legally recognised documentation and who perceive their rights to land as secure, by sex and by type of tenure

1.5 By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social, and environmental shocks and disasters

1.5.1 Number of deaths, missing persons, and persons affected by disaster per 100 000 people

1.5.2 Direct disaster economic loss in relation to global gross domestic product (GDP)

1.5.3 Number of countries with national and local disaster risk-reduction strategies

Source: This is part of the global indicator framework agreed at the 47th session of the UN Statistical Commission held in March 2016 and reviewed annually. As well as substantive targets such as 1.1–1.5 in the table, this framework includes targets for each SDG relating to resources allocated, including Targets 1.A and 1.B for SDG 1, which are omitted from this version of the table (UN n.d.).

At the time of writing (2020), extreme poverty was measured as people living on less than $1.90 a day (2011 US dollars purchasing power parity (PPP)—see Box 2.1). This figure is calculated as equivalent to the figure of $1.25 a day used when the SDGs were agreed, in 2016. It is in direct line from the first of the previous MDGs, set for the period 2000–15, which aimed to halve the number of people living on less than a dollar a day. Thus the main focus on reducing or eliminating income poverty remains, although the new goal has several other targets, thus acknowledging that poverty has other dimensions.

Box 2.1 Purchasing Power Parity (PPP)

Equating extreme poverty to a specific level of income means its value is given in currency which can be freely converted internationally, for example into US dollars. However, what can be bought for a given amount of dollars in the USA is not the same as what can be bought in, say, Sudan with the equivalent of those dollars in local currency. Very often, local prices for basic foodstuffs etc. in poor countries are lower than international prices so that more can be bought for the same dollar equivalent amount. Hence real purchasing power may be relatively higher in poor countries, so that, for example, a Sudanese on an annual income the equivalent of US$365 (one US dollar per day) might subsist somewhat better than a US citizen with only a dollar a day in the USA. Measures of individual or household income are often converted to US dollars in such a way as to allow for this factor. When this is done the result is given in ‘purchasing power parity dollars’ or ‘PPP dollars’.

Both market valuations and currency values change over time, most obviously with inflation, so that this conversion from local currency to dollars is regularly reassessed. Thus, the original MDGs were set using a poverty line of $1.00 per day in 1990 US dollars PPP, the SDGs were agreed using $1.25 per day in 2005 US dollars PPP, and the latest international poverty line (agreed in 2017) stands at $1.90 per day using 2011 US dollars PPP.

Expressing a goal such as eliminating extreme poverty in terms of a measurable target requires a criterion for deciding if an individual or household is extremely poor. Both the World Bank and the UN do this in economic terms, by measuring a person’s income and establishing a ‘poverty line’ that represents an income level below which a person is held to be in extreme poverty. The global target for reducing poverty uses a single poverty line for the whole world. Although this has changed numerically from the original somewhat arbitrary round figure of a dollar a day, it represents more or less the same level of absolute destitution or penury. There has been considerable criticism of this narrow focus on income to measure poverty. While the poverty line has been retained, there are many broader ways of understanding poverty, reflected in the variety of additional indicators and targets included in the framework for measuring the achievement of SDG 1 (Table 2.1).

p. 29Household or individual income? Differential experiences of women and men

One question with measuring income is whether this should be done at the level of the household or the individual. Much early measurement was at the former level, and national data is often gathered using the household as a unit of analysis.

Indeed, poverty used to be conceptualised in terms of the level of income needed to achieve a pre-determined and physiologically defined level of survival by members of the ‘average’ household. This poverty line served to distinguish the poor from the non-poor within a population. In early research on poverty, it was assumed that households were internally unified, and that their incomes were equitably distributed among their members. Consequently, all members of households were thought likely to be equally poor or equally well off, and inequalities within households were completely invisible.

The main way in which gender differences in poverty could be captured was through a comparison of the poverty of households headed by men and the minority of households that were headed by women. Early work by Buvinic and Yousseff (1978) found that female-headed households were disproportionately represented among households below the poverty line, but they also pointed out that they were mainly de facto female heads: widows, divorced women, and single mothers. In other words, these p. 30were households in which women were the primary breadwinners. Their poverty reflected the fact that these women were less likely to have paid work than male household heads, and when they had paid work, they were generally paid less than men.

Further insights into the gendered nature of poverty came with the challenge to the assumption of internally unified households. A large body of empirical evidence showed that income deficits impinge more severely and systematically on some members of the household than others, most often along lines of gender and age. Thus, if men get the meat, if boys get better educated, or if girl babies tend to be weaned earlier, then statistics based on households will not give a correct impression of individuals in absolute poverty. There was a need to deconstruct households and ask questions about the distribution of wellbeing within a household and how different types and causes of deprivation affect men, women, children, old people, etc. This revealed the relevance of identity-based inequalities, even among the poor, and was the first step towards a gendered understanding of poverty.

Because income data often remains at the broad household level, it is important to combine statistics on poverty and wellbeing with lived experience of poverty, i.e. qualitative assessments of how, for example, poor women describe their own experience in different parts of the world. Research undertaken in the 1980s in Bangladesh, which included such descriptions by poor women, led to the important finding, now more or less accepted as universally valid, that ‘women and men experience the state of poverty differently and often unequally, and become impoverished through processes that sometimes (though not always) diverge’ (Kabeer 1989: 10; see also Box 2.2). Part of this is that public authority affects women and men in the same population differently.

Lived experience: Personal knowledge of the world gained by direct involvement in everyday events rather than from externally verified generalised propositions, received wisdom, books, or instruction. The term is often used to describe the first-hand accounts and impressions of living as a member of a minority or oppressed group.

Box 2.2 An example of differences within households: the Rajasthan Nutrition Project (2015–17)

A widespread form of gender discrimination in certain regions of India is the taken-for-granted custom that women only eat after the men and children in the family have eaten (Narayan 2018). Where food is scarce, this means that women get lesser and lower quality food, and suffer from higher rates of undernutrition and anaemia, than men. In times of crisis, cuts in household consumption were largely borne by women, leading to further declines in their nutritional levels. Such practices had implications for children because undernourished women tend to have low birth weight babies and report high rates of infant mortality.

The Rajasthan Nutrition Project (2015–17) in north-west India sought to address this problem. The project mobilised community nutritional advocates to promote nutritional health within rural communities through a variety of means. One of these means was to provide visual comparisons of men’s plates and women’s plates to drive home the point that women were literally surviving on leftovers. One of the indicators it used to monitor project effectiveness was whether men and women ate at least one meal together. Among a range of positive nutritional outcomes, women reported an increase in the number of meals they ate with their husbands, thereby eating a larger share of the food they prepared but also having more of a chance to communicate with their husbands (Gray et al. 2017).

Private consumption, common property resources, public goods, and wealth

So far this chapter has discussed measurements of poverty in terms of income. But income is not an end in itself. It provides purchasing power and enables consumption at a very basic level, but it is not the only means for obtaining the necessities of life. The most obvious way in which poor people meet their survival needs aside from their purchasing power is through ‘subsistence production’, i.e. production of food or other items for household use (see Chapters 5 and 8). Then the private consumption of a household consists of a combination of purchased items with other items produced for direct household use. Assuming that one could estimate the potential market value of the latter items, one would add that figure to the household’s monetary income in estimating the poverty level of that household.

p. 31In order to broaden further our understanding of poverty, the pyramid of concepts in Figure 2.2 (Baulch 2006: 82) guides us through some of the ways in which the concept has been expanded over time.

Figure 2.2 A pyramid of poverty concepts.

Source: From p.82 of Baulch, B. (2006) ‘The New Poverty Agenda: A Disputed Consensus (Editorial)’, IDS Bulletin, 37(4), pp. 82–90, Institute of Development Studies, Brighton (first published in IDS Bulletin 27(1) 1996).

The first line in the pyramid in Figure 2.2 is ‘private consumption’, which includes both purchasing power and subsistence production, as discussed so far. The second line also considers access to common property resources, such as local woodlands, streams, wetlands, or other areas where members of a local community may have rights to gather wild produce, fish, or graze livestock, which may add to a household’s means of subsistence.

A poor individual or household may also avail themselves of less concrete collective or public goods such as education or health, provided by the state, which might be much less tangible but satisfy what are no less basic needs. This is added in the third line of the pyramid. These goods may be ‘free at the point of use’ or subsidised so that they represent a much bigger benefit than the actual fees paid. If a poor household or individual has access to such a public good it clearly contributes to their survival or wellbeing. Estimating this in terms of an addition to their effective income may be too difficult, so that they might seem to be in extreme poverty in terms of income while actually living better than this would imply.

The remaining lines in the pyramid take us beyond the definition of poverty as income (or consumption) which focuses on the ‘flow’ of material goods and services used for daily living. The fourth line considers also the ‘stock’ of resources a household controls: its ‘wealth’ in terms of physical or monetary assets (land, jewellery, cash) and ‘social capital’ (social contacts, networks, reciprocal relationships, community membership).

Thus the ability to survive or thrive derives not just from current income, but also from past investments, stores, or social claims on others (including the state). In particular, the assets and claims available to households will determine how they fare in times of crisis. This raises the concepts of vulnerability and resilience.

Vulnerability is the state of being exposed to the possibility of harm or being unable to withstand the effects of a hostile environment. A person is vulnerable who does not have the resources or capacity to cope when a disaster strikes or to resist the impact of a hazard.

Conversely, resilience means the ability to protect oneself from the effects of worsening external conditions or shocks, or the capacity to recover quickly from such difficulties.

Some analysts extend the concept of poverty to those who are vulnerable in the face of crisis. Small-scale pastoralists in drought-prone areas would be an example: their current income may be adequate in ‘normal’ times, but how resilient they are in the face of drought will depend on whether they have enough assets and claims to tide them over in crises. The very poor, on the other hand, are likely to be extremely vulnerable to the smallest shock, a point well captured in R. H. Tawney’s observation of poverty in rural China in the p. 321930s: ‘There are districts in which the position of the rural population is that of a man standing permanently up to the neck in water, so that even a ripple is sufficient to drown him’ (1966: 77).

This also raises the distinction between the ‘state’ and the ‘processes’ of poverty. As noted at the start of this chapter, the former is the primary meaning of poverty as the condition of ‘being poor’—but this only provides a snapshot at a particular point in time. The latter broadens our understanding of how people come to be and stay poor as well as how some people escape poverty, and hence provides pointers towards which policies might permanently reduce poverty. The ‘processes’ of poverty involve timelines to take account of movements into and out of poverty as a result of seasonal stress, shocks such as illness, drought, and war, or life course experiences.

Note here that the SDG framework, while headlining the simply stated goal of ‘ending poverty’ as measured by the international poverty line (see Table 2.1), also includes targets related to other dimensions of poverty. Thus Target 1.4 mentions rights and access to resources and services while Target 1.5 is about increasing resilience and reducing exposure to social, environmental, or other shocks.

The two bottom lines in the pyramid bring in more subjective aspects of poverty, such as loss of dignity and powerlessness. These make sense in relation to a poor person’s place in society and how poverty is defined in terms of societal norms and values. Section 2.3 considers poverty in these more relative terms. First, however, the discussion of poverty as an objectively measurable condition is completed by looking at a comprehensive approach that treats it in terms of several relatively independent dimensions of deprivation.

Multidimensional poverty: ill health, ignorance, and poor living standards

From the argument so far, low income gives an indication, though imperfect, of low material living standards, but this is only one part of the experience of poverty. One more comprehensive approach to capturing all material aspects of poverty is to characterise low income or living standards as one of several relatively independent dimensions of deprivation. An early version of this approach in the UK was found in the five ‘giant evils’ highlighted in the Beveridge report of 1942: squalor, ignorance, want, idleness, and disease. This led to the founding of the British welfare state with parallel large-scale initiatives in setting up the National Health Service, compulsory state education, social housing, and what would now be called a social protection system encompassing universal unemployment insurance, child benefits, and state pensions.

Now there is a similar recognition at global level that poverty includes linked deprivations of several distinct types, particularly relating to ill health and lack of education, as well as material living standards. As noted, in the SDGs framework, the second target within SDG 1 allows for each country to measure poverty ‘in all its dimensions’ in its own way. Globally, however, health and education are dealt with separately, in SDGs 2 and 3, rather than being regarded as aspects of poverty.

A more direct approach to measuring poverty in its multidimensionality is taken by the UNDP. Over the past three decades there has been a clear contrast between the main indicators of poverty and of development used by the UNDP and the World Bank. While the latter has concentrated on income measures, the former has taken a broader view of poverty (and development) as multidimensional. With the SDG framework adopted by the UN, the two have moved closer together, but there remain important differences of emphasis.

Most recently the UNDP, working with Sabina Alkire and colleagues at the Oxford Poverty and Human Development Initiative (OPHI), has developed a composite measure of poverty called the Multidimensional Poverty Index (MPI). This has been in use since 2010 and is in direct line from the Human Development Index (HDI) used by the UNDP from 1990 and the Human Poverty Index (HPI) (from 1997). They all determine who is regarded as poor by combining indicators in three dimensions: income or material living standards; health or ill health; and education or deprivation in knowledge. Unlike its predecessor the HPI, the MPI does not use income at all in its estimation of the standard of living of a household, preferring to use direct indicators of material poverty such as the lack of electricity or access to safe drinking water—which can in turn be related to different goals within the SDG framework.

Table 2.2 sets out the indicators and weightings used, together with the related SDG for each indicator, while Box 2.3 gives an example of someone is ‘multidimensionally poor’ by this measure. While multidimensional poverty as measured in the MPI is about individuals within households, the MPI itself applies to regions or countries and is discussed further in Section 2.4, including how it is calculated as an index.

Box 2.3 Poverty profile: Pedro, Ecuador

Pedro is a 38-year-old man who lives in a small town about a one-hour drive on a dirt road west of Cańar, Ecuador. He and his wife had five children, four of whom survive, aged 4, 10, 16, and 17. They also take care of Pedro’s stepfather, Pelayo, who is 77, and unable to work. Pelayo used to receive a pension but that ended due to problems with his identity card.

Pedro and his wife make about US$10–15 a day. But they can find work only one week per month. So the family income is only $675 per year. They do have electricity and a latrine. Water, from a hose on an outside patio, is a short walk away. But their house has a dirt floor. They cook outside with wood in a rudimentary fireplace. They do not own a TV, radio, or any electrical appliance, or even a bicycle. They own two head of cattle, two pigs, and three chickens.

Pedro is poor according to the global MPI. The coloured boxes in the chart show the deprivations he faces (see Figures 2.3a and 2.3b).

(OPHI 2017: 3)

Figures 2.3a and 2.3b Pedro, Ecuador.

Source: Reproduced with permission from from OPHI Briefing 47 2017 (CC BY-NC-ND 4.0).

2.3p. 33 Relative poverty, social exclusion, and inequality

Poverty, values, and culture

So far, the focus has been on various objective dimensions of poverty: low income or consumption, material deprivations, lack of schooling, malnutrition, and very limited assets. This reflects the idea behind the first SDG target of eliminating extreme poverty, that absolute poverty is much the same in any society. In fact, the idea of who is poor is different in different societies and is likely to depend on value systems as well as economic factors. Thus, subjective notions of poverty may vary greatly, depending on local understanding and perceptions. As Rahnema explains:

p. 34p. 35

For long, and in many cultures of the world, poor was not always the opposite of rich. Other considerations such as falling from one’s station in life, being deprived of one’s instruments of labour, the loss of one’s status or the marks of one’s profession …, lack of protection, exclusion from one’s community, abandonment, infirmity, or public humiliation defined the poor (1992: 158).

This point speaks to a famous study by Jodha (1989) of two villages in Rajasthan, India in 1963–66 and 1982–84. He found that while the per capita income of many of their households had declined over time, the wellbeing of these households had improved according to other dimensions of wellbeing that they considered to be important. These included a decline in reliance on the patronage of the wealthy for employment and security, patronage which often had hidden economic costs along with dependent status involved; reduced engagement in low-paid and inferior activities; and less need to resort to distress-induced coping mechanisms such as taking children out of school. Conversely, it is possible for poor people’s income to increase, for example by taking low-paid, insecure employment, while their subjective wellbeing declines due to loss of independence or dignity.

Jodha’s work made a point that has become increasingly important: that subjective notions of poverty are likely to reflect local values and perceptions and hence require context-specific analysis. They may also go beyond material wellbeing to include intangible factors such as autonomy, self-esteem, or participation, the base of the conceptual pyramid in Figure 2.2. Poverty often manifests itself in the nature of the trade-offs that poor people must face. The very poor have to concentrate so completely on survival that they have to forego the intangible dimensions of wellbeing.

For example, here is one woman’s explanation for doing agricultural work in the fields in Bangladesh, where norms of propriety required respectable women to remain secluded within the home:

What need have the poor for self-respect or propriety? Everything is dictated by scarcity (abhab): scarcity of food, scarcity of clothes, scarcity of shelter, there is no end to scarcity … there are mothers who cannot feed their children, can they afford propriety? (Kabeer 1989: 7).

This statement suggests that for those living on the margins of physical survival, the struggle to stay alive is an overriding priority. But it also conveys the harsh nature of the trade-offs that define poverty. This woman could abide by her community’s norms and enjoy social approval, or she could feed her children.

Over time, qualitative assessments of poverty have helped to draw particular attention to gender differences in the priorities expressed by poor people, differences that reflect the roles and responsibilities assigned to men and women by households and communities. They have also pointed out women’s greater workloads, giving rise to the concept of ‘time poverty’ (Hanmer et al. 1997), as well as the gendered ways in which poor men and women experience violence (Kabeer 2015).

Violence as another dimension of poverty

One additional aspect of deprivation is lack of personal security or exposure to violence. This includes class-based violence experienced by poor people in many contexts (Beck 1994) and also patriarchal forms of violence faced by women.

These two intersect in different ways. Thus class-based violence may be mediated by gender: many poor women speak of rape and sexual harassment by men from more affluent families. One young girl interviewed in the Bangladesh research had been raped by the sons of the landlord she worked for and had turned to prostitution: ‘Now she charges money for what they took by force’ (Kabeer 1989: 22).

Second, certain forms of patriarchal violence are mediated through class via its link to scarcity. Conflicts revolving around food emerge as a frequent trigger for violence: in the same research, women were beaten if there was not enough food, if it did not taste right or if they were found tasting it before their husbands had eaten. There also seemed to be a seasonal pattern to domestic violence in that it increased in the ‘hungry’ months. A similar observation was made in a study by Hartmann and Boyce who had been told by a sharecropper’s wife in the village they studied: ‘When my husband’s stomach is empty, he beats me, but when it is full there is peace’ (1983: 89). As the authors pointed out, wife-beating was frequently an outlet for men’s powerlessness in the face of grinding poverty.

Poverty as capability deprivation

This expanded understanding of poverty suggests it is necessary to leave aside considerations of income and focus directly on poverty as the converse of wellbeing p. 36or what matters to people. Money metric measures fail to capture the harsh realities and absence of choices that define the condition of poverty (see Figure 2.4).

Figure 2.4 Are these people ‘poor’? Labourers in the opencast Serra Pelada gold mines in northern Brazil, 1989. They have a regular though low income, with considerable risk of injury or work-induced illness. How much choice do they have?.

Source: Worldwide Picture Library / Alamy Stock Photo.

A very useful way of looking at this issue is through the capabilities approach developed by Amartya Sen. In Development and Freedom (1999: 14), Sen quotes Aristotle: ‘Wealth is not the good we are seeking; for it is merely useful and for the sake of something else.’ What that ‘something else’ is, what is wanted from life, varies from person to person. Sen comments: ‘The usefulness of wealth lies in the things it allows us to do – the substantive freedoms it helps us to achieve. … Expanding the freedoms that we have reason to value not only makes our lives richer and more unfettered, but also allows us to be fuller social persons, exercising our own volitions and interacting with – and influencing – the world in which we live.’

Sen goes on to develop the idea of ‘capabilities’ in terms of what allows people to ‘lead the types of lives they value – and have reason to value’. He mentions in particular ‘the capability to live really long (without being cut off in one’s prime) and to have a good life while alive (rather than a life of misery and unfreedom) – things that would be strongly valued and desired by nearly all of us’ (ibid: 14). From this perspective, poverty means ‘a deprivation of basic capabilities’, rather than merely low income.

Capabilities: According to Sen, a person’s capability refers to their ‘substantive freedom’ to ‘achieve various lifestyles’ (1999: 77). This is about the ability to choose, but seen in terms of what is objectively necessary for a person to have meaningful choice in the sense of being able to do things which they value and have reason to value.

Sen’s approach can be seen as linking the relative, values-based approach to poverty back to the more objective approach in Section 2.2. While he is concerned with poverty in terms of limitations on ‘substantive freedoms’ or lack of choice (and of course what each person would choose is a subjective p. 37matter), he also seeks to define objective factors which deprive people of meaningful choice. As such his approach has been cited as a major influence on the choice of measures in the MPI (e.g. Alkire 2015). In other words, the deprivations chosen to be part of that index are meant to reflect the major ways in which poor people’s material conditions limit their choice over their futures.

Relative poverty

An alternative to considering income poverty in terms of a fixed poverty line or objectively measured deprivations is to measure poverty in relation to the norm for a particular society. Thus an individual could be said to be in relative poverty if their income is below half the median income level in a particular country. In the UK, for example, the official poverty line is set at 60 per cent of median household income, with different levels set for different household types and separate calculations before or after housing costs. The result is that British households living on less than about £13 per day per person [in 2018] are regarded as poor.

However, it is generally agreed that it is better to think in terms of poverty in relation to cultural norms than by a rigid mathematical formula. One of the best-known discussions of the notion of relative poverty in this sense comes from a work on poverty in Britain at the end of the 1970s by Peter Townsend (1979).

Relative poverty: ‘Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the types of diets, participate in the activities and have the living conditions and amenities which are customary, or at least widely accepted and approved, in the societies to which they belong. Their resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities’ (Townsend 1979: 31).

This notion was attacked by those who argued that people in industrialised countries should not be regarded as poor if, for example, they were unable to afford a television or refrigerator or a few toys for their children, so long as they could maintain a minimum level of nutrition. These days one might debate whether being unable to afford a smartphone and phone contract and hence to participate in social media makes a person ‘poor’. Conversely, there may be objections to conceiving poverty in terms of the capacity to participate in the life of a community on the grounds that it downgrades the needs of whole populations living in poorer countries where ‘customary’ ‘living conditions’ may be at a materially lower level.

Nevertheless, this notion of relative poverty has gained widespread acceptance. If there is to be an income-based poverty line, it implies setting that line at a higher level in industrialised countries so as to take account of the fact that more consumer goods are necessary to take part in ‘ordinary living patterns’ in those countries compared with less developed countries. However, this appears to make an unwarranted assumption that there is an automatic link between income and participation, or functioning, in the life of a community. In practice what it takes to participate may not be simply measured in terms of income.

At the time the MDGs were agreed, the World Bank used a specific figure of US$14.40 per day (in 1985 PPP dollars) to calculate the numbers in poverty in industrialised countries (rather than the $1 per day for the world as a whole). This figure was the official US income poverty line, calculated in terms of the minimum required to obtain what was needed to participate in the everyday life of US society.

Now, however, the approach is to leave it to each country to decide how to calculate its own poverty line or assess its progress in reducing poverty by other means. Thus, the second target for SDG 1 is: ‘By 2030, reduce at least by half the proportion of men, women and children living in poverty in all its dimensions according to national definitions.’ According to the World Bank, some countries ‘define poverty rates using benchmarks based on income’, while others ‘aim to capture the multidimensional nature of poverty by assessing the extent to which households are deprived in different ways’ (2017: 2–3).

This fits with interpreting Townsend’s ideas somewhat differently, in terms of a broader notion of the ‘resources’ ‘commanded’ by a person or household than just income. Thus, Sen’s capabilities approach puts forward a view of poverty which derives from the idea of failure to be able to take a full part in human society but which sees this as a matter of lack of choice or capability rather than simply wealth or income.

Social exclusion

Another idea related to relative poverty is that of social exclusion. This concept originated in France but is now applied throughout the industrialised North and p. 38its applicability for the South is a matter of debate (see e.g. de Haan 1998). de Haan argues that social exclusion is a useful concept for two main reasons. First, it points up the multidimensional character of deprivation in that exclusion can have various causes (which often reinforce each other), such as unreliable employment, gender, ethnicity, disability or ill health, and lack of opportunities for participation, as well as low income. Second, it focuses on processes: on ‘the mechanisms and institutions that exclude people’ (1998: 10). This makes it clear that deprivation is not simply an attribute of particular people but that different societies have their own ways of defining people out.

Social exclusion: ‘the process through which individuals or groups are wholly or partially excluded from full participation in the society in which they live’ (European Foundation 1995: 4).

Bauman discusses the way ‘the poor’ are defined in a similar vein, as follows:

No society we know of was ever free of a category of people who were seen by the rest as incapable, for whatever reason, of eking out a living by their own efforts; of living as the rest do. It is a social decision to classify people in such a way. Since it has little to do with who those people are, or even what they do, the expectation that ‘the poor will always be with us’ can hardly be faulted. Each society constitutes and perpetuates itself through setting and prompting certain standards it expects every member to follow, and those standards can only be made visible if some people are seen to fail to meet them. Such people can then be declared a ‘problem’ which the rest of society must and should cope with.

The poor of different times and places differ between themselves in virtually every aspect of their condition, just like the societies of which they are part. Who is cast in this way depends not on how the poor live, but on the way society as a whole lives … The treatment reserved for the poor, the way in which pity and condemnation are mixed, is a matter for society at large rather than for the poor themselves; a reflection of the standards a given community holds dear and is bent on cultivating (1999: 20).

Many studies of social exclusion in the North concur with previous discussions of poverty in attributing it mainly to unemployment, so that solutions concentrate on job creation (or the French term ‘insertion’ in the sense of insertion into the labour market and hence into the community). However, Bauman argues that modern industrial society is essentially a consumer society and that those unable to contribute to market demand are increasingly blamed, ‘accused of flaunting the values by which “decent” people live’, with the result of ‘shifting the people living below the poverty line from the realm of moral responsibility to that of law and order’ (ibid: 21).

Applying the concept of social exclusion in the context of the Global South equally revolves around the extent to which people are able to participate in the life of their community (Kabeer 2000).

Inequality: vertical and horizontal

Defining ‘the poor’ either by how far their income is below some average or by their ability to participate in society inevitably leads to consideration of inequalities. Here it is important to consider not only vertical inequalities—the disparities in income or wealth between individuals or households at lower or higher levels—but also what have come to be known, following Stewart (2002), as horizontal inequalities—disparities between socially defined groups on the basis of gender, race, caste, etc.

‘Vertical inequalities’ are based on ranking individuals or households, most often by income or wealth, and are about the severity of the differences between those placed high or low. Vertical inequalities tend to measure the distribution of income and wealth but can also be applied to other differences, for example in levels of educational attainment or health outcomes such as life expectancy, that pertain to individuals or households.

By contrast, ‘horizontal inequalities’ refer to inequalities between socially defined groups that often cut across income groups. Vertical inequalities draw attention to class-based inequalities, while horizontal inequalities address social discrimination based on marginalised identities, such as gender, race, and caste.

Inequality has been more prominent in analyses of poverty in recent years, mainly in terms of vertical inequalities. The global differences between the wealthiest and the poorest are becoming increasingly stark (in January 2018 it was reported that the six richest people on earth owned more wealth than the bottom half of the world’s population), and many societies are becoming more and more unequal in terms of p. 39wealth and income, especially since the financial crash of 2008 (see Section 2.4).

Horizontal inequalities have featured more prominently in the analysis of conflict. Horizontal inequalities are unjust because they disadvantage individuals on the basis of factors outside their control such as their gender, race, or ethnicity. There is clear evidence that the larger the horizontal inequalities, the greater the risk of violent conflict because such grievances lend themselves to political mobilisation (Stewart 2008).

Intersecting inequalities and ‘hard-core social exclusion’

Applying the concept of social exclusion in the countries of the Global South has to capture what constitutes significant forms of participation within these contexts. Efforts to monitor progress on the MDGs within different countries have showed that certain groups are more likely than others to be ‘left behind’ or ‘locked out’ of any progress in their countries (Kabeer 2014). These were groups that were located at the intersection of the vertical inequalities of income and wealth, the horizontal inequalities of group identity, and, very often, geographical inequalities associated with disadvantaged locations (Section 2.4). Rather than the disadvantages associated with different kinds of inequality simply adding together, the intersection of these inequalities led to their reinforcement and exacerbation. This gives rise to ‘hard-core social exclusion’ (Gore and Figueiredo 1997: 19): forms of deprivation and discrimination that persist over lifetimes and across generations.

These intersecting inequalities lead to clustering of social, economic, spatial, and political disadvantage among indigenous peoples, the lowest castes, and racial minorities at the lower end of the income distribution. These groups tend to be crowded into the poorest and most demeaning of occupations, to live in the most challenging environments, whether urban slums or remote rural areas, to be looked down on by others in their society, and to be denied voice and influence in the affairs of their society (Kabeer 2014). Furthermore, because gender cuts across these other forms of inequality, women and girls from these marginalised social groups very often experience the worst forms of disadvantage. They are less likely to have access to basic social services, land, and economic opportunities relative to men in their group as well as relative to women from more affluent households.

2.4 Poverty and inequality at societal, national, and global levels

As well as poverty applying to individuals or households, it is also quite normal to speak of poor neighbourhoods, poor regions, or poor countries. But, in conceptualising and measuring poverty at these broader societal levels, one must be wary of labelling based on particular indicators or partial data. In addition to his observation (quoted in Section 2.3) about poverty having different meanings in different societies, Rahnema also argues that ‘Global poverty is an entirely new and modern construct’ (1992: 161; our emphasis). It is certainly quite new to use economic or survey data to measure poverty at the level of entire nations. Rahnema suggests that while in many pre-industrial societies poverty applied to certain individuals and generally did not carry any implication of personal inadequacy, with the advent of global consumer society ‘entire nations and continents were led to believe that they were poor, and in need of assistance, only because their per capita income was below a universally established minimum’ (ibid: 162). This warning applies equally to the use of any measure to define certain countries as poor, not just per capita income.

So far this chapter has looked at ways of measuring poverty that are essentially ways of identifying particular individuals or households as poor, either in absolute terms or in relation to the norms of a particular society. These measures are also used at regional or national level to compare countries in terms of the proportion of the population suffering extreme poverty (or, in the case of the MPI, the intensity of poverty among the population as well as this ‘headcount ratio’). The distribution of such measures leads to calculations of inequality—which in fact only makes sense as a characteristic of neighbourhoods, regions, or countries or as a global measure (an individual or household cannot be ‘unequal’ by themselves). However, it is also possible to look at neighbourhoods, regions, or countries and characterise some of them as poor directly, not just because of a statistically high concentration of poor people.

Multiple deprivations in poor neighbourhoods

The effects of intersecting inequalities are evident by looking through the lens of spatial disadvantage p. 40at ‘poor’ neighbourhoods and the lived experience of their inhabitants. Box 2.4 is a description based on ethnographic research in a ‘poor’ neighbourhood in Argentina (Figure 2.5)—an upper middle-income country.

Box 2.4 Poverty and violence in an urban neighbourhood in Argentina

‘This is a 22mm gun’, says thirteen-year-old Jonathan, pointing to one of his drawings. Few kids his age know the names and shapes of weapons circulating in the neighborhood, but Jonathan (a pseudonym) can easily distinguish between a 45mm, 9mm and a 22mm. When his uncle goes out and ‘steals around’ at a nearby shantytown, Jonathan is often his lookout. At school he spends his days listening to music on his cell phone, horsing around, and drawing: weapons are among his favorite subjects. At the end of the year, he will receive his elementary school diploma—despite the fact that his reading and writing skills are only at a fourth-grade level.

Jonathan lives with his four brothers and his mother in a makeshift house with exposed brick walls and tin roofing, where he shares a small bedroom with his brothers. His house is located 20 blocks from the school in one of the most destitute areas of Igeniero Budge, a low-income neighborhood in the Buenos Aires metropolitan area. Teresa, Jonathan’s mother, commutes an hour and a half each way to work downtown, six days a week. She leaves the house before Jonathan wakes up for school in the morning, returning home around nine o’clock at night, shortly before Jonathan goes to bed. Her salary as a maid, plus a meager sum provided by the state, is barely enough to make ends meet.

Material deprivation and interpersonal violence are brutally present in Jonathan’s neighborhood. There are, he says, ‘tons of drug-dealers who shoot at each other every day’. Violence is also present at home. ‘We don’t have anything at home, and [my father] doesn’t do shit. He sleeps all day. He drinks a lot. And then he fights with my mother all the time.’ More than once, Teresa has suffered the drunken fury of her domestic partner. ‘Last time, he nearly killed her,’ Jonathan told us. Jonathan’s father once dragged his mother by the hair, down the street, and began insulting her in public.

Ingeniero Budge (population 170 000) sits in the southern region of metropolitan Buenos Aires, in the municipality of Lomas de Zamora. Located adjacent to the highly polluted Riachuelo River, this poverty-stricken area, like many informal settlements in Latin America, is characterised by extreme levels of infrastructural deprivation: unpaved streets, open-air sewers, random garbage collection, polluted drinking water, and poor lighting (Figure 2.5).

The Asignación Universal por Hijo (AUH), the Argentinian conditional cash transfer program, and many other welfare programs provide cash or in-kind assistance to many of Ingeniero Budge’s inhabitants. Soup kitchens funded by catholic charities or by the governing (Peronist) party are also a source of assistance for those in need, providing crucial resources such as food and medicine. The informal labour market is an important component of household incomes in the area; resident work as vendors in street fairs, as well as in construction, domestic service and scavenging.

Source: Extracts from Auyero 2013: 24–5.

Figure 2.5 In Ingeniero Budge, evidence of deprivation is everywhere.

Source: Courtesy of Javier Auyero.

Box 2.4 does not mention how public authority is wielded by, for example, drug suppliers, the Catholic Church, and the state, but the balance between these is likely to play a big part in shaping the lives of the residents. Box 2.4 also gives a very different picture from the traditional Northern image of the poverty of the unemployed, as in the Depression of the 1930s, and from the rural poverty of the mass of the populations of Africa and South Asia. Still, it is clear that in all these cases the poor suffer from a variety of deprivations that reinforce each other. This example also illustrates how poverty at neighbourhood level, just as for poor individuals, involves feelings as much as measurable as material deprivation, especially the feelings of being trapped and lack of choice and hope.

Measuring national or regional poverty: per capita income

When it comes to larger geographical and political units there are a number of ways of measuring poverty. The indicator used by the World Bank to establish which countries are regarded as poor is gross national income (GNI) per capita. GNI is closely related to GDP, which is used as a measure of the economic development of different countries (Chapter 3). Both use market valuations; GNI measures national income while GDP measures the size of the economy, so that to a large extent they are two sides of the same coin.

Gross national income (GNI) is the total income available for private and public spending in a country, while GDP measures the size of the economy. Gross domestic product (GDP) is clearly and simply an output measure, defined by the World Bank as the ‘total final output of goods and services produced by an economy’. In the case of GNI, output is used to define a measure of income. Thus, GNI is ‘the total domestic and foreign output claimed by residents of a country’ in one year. What they ‘claim’ is also their income; thus, GNI is a measure of national income and GNI per capita measures the average income of the resident population, including what they may earn or receive from abroad.

GNI and GDP are, of course, closely related. The GNI of Nigeria, for example, is the output produced in Nigeria (its GDP), less whatever is ‘claimed’ outside the country (repatriated profits, migrant workers’ earnings remitted abroad, etc.), plus what those living in Nigeria earn outside the country (remittances from abroad, returns on investments abroad).

(GNI has recently replaced gross national product (GNP) as the preferred measure of national income. They are very similar except for technical differences over treatment of taxes and distinguishing between the income of residents in as opposed to nationals of a country.)

GNI can be calculated from gross economic statistics. GNI per capita gives a direct indication of the average material living standard of a nation’s people without the need for detailed survey data on the income levels of the whole population. However, it has several severe limitations as an indicator of poverty or development.

p. 41First, being an average, GNI per capita says nothing about the distribution of income between rich and poor. Income distribution is notoriously difficult to measure, both for political and for technical reasons. Where statistics can be found, however, they indicate that many less developed countries have greater inequalities in income than industrialised countries. A few rich individuals may so distort the picture that the GNI per capita figure corresponds neither to the low standards of the masses nor to the wealth of these few.

Second, even where income distribution figures exist, they will generally be based on surveys carried out using the household as a unit rather than individuals. As previously noted gender and other inequalities within households tend to be completely invisible. Also, larger households tend to be poorer, another reason why income per head may be even more unequally divided than income per household.

Finally, in general, GNI as an indicator underestimates both subsistence and collective goods, whereas it p. 42overvalues whatever is commercialised, individualised, and organised. Thus it places no value on, for example, peace and security or the quality of the natural environment. However, the manufacture of weapons and police equipment would contribute to GNI, while a polluting industry with added pollution control could contribute more to GNI than a less polluting alternative.

Inequality at national or regional level

It is useful to complement GNI per capita with information on the distribution of income, for example through different ways of measuring inequality. Section 2.3 distinguished vertical from horizontal inequalities and showed how intersecting inequalities lead to ‘hard-core social exclusion’. However, as noted, inequality is properly a characteristic of societies rather than of individuals. Box 2.5 introduces briefly two of the various available technical measures of the extent of vertical inequality in a society.

Box 2.5 Measures of vertical inequality

On the whole, measures of inequality can be divided into average-based and polarisation measures. They are most commonly applied to inequality of income, although they can also be calculated for inequalities of wealth or of any other quantity which applies to individuals or units within a statistical population.

The most common is the Gini coefficient, an average-based measure which provides a single number between zero and one derived by calculating how far the actual distribution (of income, say) diverges from a perfectly equal distribution. The Gini coefficient summarises information on all individuals in one number, so it appears to be a very complete measure. However, this also means that very different distributions can give rise to the same Gini coefficient. For example, if extreme poverty is reduced at the same time as the very rich become richer, with the middle being squeezed, there may be no overall change in the Gini coefficient. At the same time, the way the Gini coefficient is calculated means that it arguably gives not enough weight to the top and bottom ends of a distribution.

By contrast, polarisation measures specifically focus on the extremes. A measure of polarisation of income, more recently introduced, is the ‘Palma ratio’: the ratio of the income share of the top 10 per cent in the income distribution to that of the bottom 40 per cent.

It is increasingly recognised that inequality is important in its own right and not just as a corollary of poverty. For example, Pickett and Wilkinson (2009) show that for higher-income countries inequality in itself can have a negative effect on a number of social indicators independent of the effect of income poverty. For low- and middle-income countries, too much inequality can act as a drag on economic growth and is also associated with poorer educational and health performance, as well as with damage to poorer people’s feelings of dignity and self-worth.

Global patterns of inequality are changing. While the polarisation between the world’s very richest and poorest continues to increase, overall global inequality as measured by the world’s Gini coefficient has decreased over the last 20 years at the same time that inequality within many countries and regions has increased. The World Inequality Lab measures the share of total national income taken by the top 10 per cent of the income distribution for each of the world’s main regions and large countries, and how this has changed over the past 30 years (Alvaredo et al. 2018). They show that inequality by this measure may be converging towards a similar level of high inequality to that previously experienced in the most unequal regions (Africa, Brazil, the Middle East) (see Figure 2.6). According to Milanovic (2016), while this trend lends greater importance to policies to reduce inequality within countries, especially middle-income countries with large numbers of poor people such as China, it is still the case that where a person was born determines their position in the global income hierarchy much more than their class status within their own country. As a result, migration is the greatest potential means of reducing global poverty.

Figure 2.6 Top 10% income shares in major world regions and countries, 1980–2016. Is there convergence towards high inequality?.

Source: From Alvaredo et al. (2018) World Inequality Report 2018. © World Inequality Lab 2017 (CC BY-NC-SA 4.0).

Reducing inequality is included in the SDG framework as a goal in its own right and includes targets and indicators which refer to both vertical and horizontal inequalities within countries and various aspects of global inequality between countries as well as on facilitating migration (SDG 10: Reduce inequality within and among countries).

The global Multidimensional Poverty Index (MPI)

Section 2.2 contrasted the World Bank’s income-based poverty line and UNDP’s concentration on multidimensional poverty. The latter approach was introduced as an alternative way of defining which individuals or households are poor, but it is designed as part of the calculation of an index to be applied at regional or national level. Thus, the MPI for a country or region is a number between zero and one which combines p. 43the proportion of people in multidimensional poverty with the severity of their poverty. A higher figure for MPI means more widespread and worse poverty.

The Multidimensional Poverty Index (MPI) … complements monetary measures of poverty by considering overlapping deprivations suffered by individuals at the same time. The index identifies deprivations across the same three dimensions as the HDI and shows the number of people who are multidimensionally poor …

About 1.5 billion people in the 102 developing countries currently covered by the MPI—about 29 per cent of their population—live in multidimensional poverty—that is, with at least 33 per cent of the indicators reflecting acute deprivation in health, education and standard of living (UNDP 2017).

The MPI uses ten weighed indicators to measure deprivation within the three dimensions, as shown in Table 2.2 and Box 2.3. A person is identified as ‘multidimensionally poor’ if they are deprived in at least a third of the weighted indicators. Within a region or country, the incidence (or headcount ratio) of multidimensional poverty is the percentage of people who are poor in this sense; while the intensity of multidimensional poverty is the average proportion of the ten indicators in which poor people are deprived. The MPI itself is the product of the incidence and intensity of multidimensional poverty.

Table 2.2 The dimensions, indicators, deprivation thresholds, and weights of the MPI.



Related SDG

Deprived if …

Relative weight



SDG 2 (Zero Hunger)

… any adult or child for whom there is nutritional information is malnourished


Child mortality

SDG 3 (Health and Wellbeing)

… any child has died in the family in past five years



Years of education

SDG 4 (Quality Education)

… no household member has completed five years of schooling


School attendance

SDG 4 (Quality Education)

… any school-aged child is not attending school up to the age at which they would complete class 8


Living standard

Cooking fuel

SDG 7 (Affordable and Clean Energy)

… the household cooks with dung, wood, or charcoal



SDG 6 (Clean Water and Sanitation)

… sanitation facility is not improved (according to SDG guidelines), or improved but shared with other households


Drinking water

SDG 6 (Clean Water and Sanitation)

… [no] access to safe drinking water (according to SDG guidelines) or safe drinking water is more than a 30-minute walk from home, round trip



SDG 7 (Affordable and Clean Energy)

… the household has no electricity



SDG 11 (Sustainable Cities and Communities)

… the household has a dirt, sand, or dung floor



SDG 1 (No Poverty)

… the household does not own more than one of: radio, TV, telephone, bike, motorbike, or refrigerator; and does not own a car or truck


A person is multidimensionally poor if she is deprived in at least one-third of the weighted indicators in the table.

Source: Compiled from OPHI Briefing 47 Tables 1 and 2 (2017: 2–3).

Unlike GNI per capita, MPI can only be calculated from survey data about individual households. However, an important feature of the MPI methodology is that the data used to calculate the actual index can also be analysed to provide information on the distribution of poverty in the country or region concerned, and that not just as a measure of (vertical) inequality, but in terms of pattern and types of poverty. The MPI is designed so that this information will be useful in informing targeted poverty-reduction policies.

2.5p. 44 Conclusion: implications for policy in a changing global context

This chapter has laid out the main ways of conceptualising and measuring poverty at different levels. Any development project or any policy for reducing poverty will be explicitly or implicitly underpinned by a particular conceptual view of poverty and its causes. Thus, for example, a rural electrification or child immunisation programme would both contribute directly to reducing different aspects of multidimensional poverty. By contrast, both the Rajasthan Nutrition Project (see Box 2.2) and the state cash transfer and other welfare programmes mentioned in the Argentinian example in Box 2.4 used an income- or consumption-based conception of individuals in poverty. However, the former also focused specifically on gender-related horizontal inequalities within households. In the latter case, violence and pollution were important aspects of the neighbourhood deprivation apparently not addressed by the welfare programmes.

It is notable that Argentina is a middle-income rather than a poor country. Box 2.4 did not give further details, but cash transfer programmes are often conditional, for example linked to school attendance. There are also examples of cash transfers linked to prediction of drought. It is beyond the scope of this chapter to go into the detail of the myriad types of policy and programme aimed at reducing poverty. However, these examples already point to two particular aspects of today’s changing world which are of prime importance for policy responses to poverty: the spread of extreme poverty beyond just ‘poor countries’; and the link between poverty and other aspects—environmental and social—of what can be seen as a ‘global crisis’. The chapter concludes with a brief consideration of each of these.

Poor people or poor countries?

The World Bank divides the countries of the world into high-income, upper middle-income, lower middle-income, and low-income by setting thresholds in terms of GNI per capita. Thus, for the financial year 2018/19 those countries with GNI per capita below US$1025 are termed low-income countries. A little arithmetic shows that in these countries the average income per person is less than twice the international poverty line of US$1.90 per day.

Until recently, extreme poverty has been regarded as a problem of low-income countries (LICs). Collier (2007), for example, noting that in general global poverty had been falling for decades, identified the ‘bottom billion’ of the world’s poor as those living in certain countries (mostly in Africa) which remained very poor because of being caught in one or more of four ‘traps’: civil war; the natural resource ‘curse’; being landlocked with ‘bad neighbours’; and being a small country with poor governance.

Equally, it has been reasonable to assume that the great majority of those below the income-based poverty line were in low-income countries. Indeed, one could estimate the numbers in extreme poverty from measures of GNI per capita together with assumptions about the distribution of income within countries, and this might well be easier than measuring the extent of extreme poverty directly because of the enormous difficulties associated with measuring the incomes of individuals or households on a large scale.

Now, however, as noted in Chapter 1, these assumptions have come under attack. Sumner (2010) estimated that, whereas in 1990 93 per cent of the world’s poor lived in LICs, by 2007–08 less than a quarter did so. Since 1990 the total number in extreme poverty has declined considerably, but the great majority of the world’s remaining poor now live in countries which have moved from the low-income into the middle-income category in the meantime, notably several very large Asian countries including China and India. While these countries have large, stable, and growing economies, they are also increasingly unequal (Figure 2.6, Section 2.4). Economic growth has increased average income, lifted these countries out of the low-income category, and reduced the numbers below the absolute poverty line. This still has not benefited these countries’ very poorest.

Sumner estimated that of the 1.7 billion in extreme poverty in 2010, ‘approximately 1.3 billion live in middle-income countries (MICs) and about a quarter of the world’s poor, approximately 370 million people, live in the remaining thirty-nine low-income countries – largely in sub-Saharan Africa. This startling change over two decades implies a new “bottom billion” who do not live in fragile and conflict-affected states, but in stable, middle-income countries’ (ibid: 1).

This trend is likely to have continued and implies that policies aimed at stabilising and creating economic development in LICs should no longer be more than one part of an international effort to eradicate poverty. p. 45Indeed, there are several targets within SDG 1. They include not only the eradication of extreme poverty measured by income and the reduction of the proportion of people living in poverty ‘in all its dimensions’, to be assessed in whichever ways different countries (including middle-income countries) prefer, but also implementing comprehensive social protection systems, ensuring equal rights to economic resources and access to basic services, and building the resilience of the poor and reducing vulnerability to economic, social, and environmental shocks and disasters.

Poverty as part of a multifaceted global crisis

The deprivations suffered in the location depicted in Box 2.4 go beyond the dimensions of ill health, poor educational attainment, and low material standards included in the UNDP’s MPI. For example, such neighbourhoods are subject to a high degree of violence and to dangerous levels of pollution and vulnerability to disease. It is unclear whether these should be included as aspects of poverty. What is incontrovertible is that many of the world’s poorest people also suffer directly from the consequences of social disintegration, environmental destruction, and public health emergencies, which together with poverty itself are major aspects of the multifaceted global crisis highlighted in Chapter 1.

The following brief extracts, first written in 1995 but still very apt, give a flavour of one view of this situation in terms of three interlocking elements:

Even in the world’s most affluent countries, high levels of unemployment, corporate downsising, falling real wages, greater dependence on part-time temporary jobs without benefits, and the weakening of unions are creating a growing sense of insecurity … The world is increasingly divided between those who enjoy opulent affluence and those who live in dehumanising poverty, servitude and economic insecurity …

Evidence of the resulting social stress is everywhere: in rising rates of crime, drug abuse, divorce, teenage suicide, and domestic violence; growing numbers of political, economic environmental refugees; and even the changing nature of organised armed conflict …

Environmentally, although there have been important gains in selected localities in reducing air pollution and cleaning up polluted rivers, the deeper reality is one of growing ecological crisis … The younger generation lives with the question of whether they may be turned into environmental refugees by climate changes that threaten to melt the polar ice caps, flood vast coastal areas, and turn fertile agricultural areas into deserts (Korten 2015: 44–6).

Including public health emergencies as a fourth element of the global crisis underlines how they can reinforce each other and may spiral out of control. Thus, the squalid living conditions of many of the world’s poorest, as well as their concentration in areas of poor environmental quality, render them especially vulnerable to new infectious diseases, while the generally precarious nature of their livelihoods means they cannot afford protective measures and are likely to suffer disproportionately from the effects of the subsequent economic downturn. At another level, areas suffering from violence or social breakdown may be least able to support agencies with public authority that can maintain public support for the extreme measures required to contain new epidemics.

However, as noted in Chapter 1, there are considerable development achievements to balance against continuing deprivation and the other aspects of the global ‘crisis’, which is escalating at the same time as high rates of GDP growth in many middle-income countries, especially China. Despite the global economic downturn since the financial crash of 2008, numbers in extreme poverty have continued to fall, at least up to the onset of the COVID-19 pandemic and the likely ensuing depression. It is clear that social dislocation, the threat of disease, and environmental degradation should be considered alongside poverty, if not as aspects of it, when assessing the huge problems which development has to address in the twenty-first century.


Poverty is a condition of certain individuals. The first SDG, to ‘End poverty’, has as its headline target to eliminate extreme poverty by 2030, so that no-one anywhere in the world would have an income below an international poverty line equivalent to $1.90 per day in 2011 US dollars PPP.

Income poverty has many limitations as a measure of poverty. Other ways of conceiving and measuring the poverty of individuals include: taking gender and other inequalities into account within and between households; relative poverty or social exclusion; p. 46poverty as a deprivation of capabilities; incorporating multiple dimensions of deprivation. Different views on what poverty is will lead to different theories about the ‘processes of poverty’, i.e. the ways in which people move in and out of poverty, and hence to different policies for reducing or eliminating it.

Poverty is also applied to whole communities, regions, or countries. Two main contrasting ways of measuring poverty at these levels are GNI per capita and the MPI. There are also different ways of measuring inequality at these levels.

Globally, patterns of poverty and inequality are changing so that the majority of poor people no longer live in poor countries as measured by GNI per capita. Global poverty also has to be considered alongside social disintegration and environmental destruction as interrelated issues and parts of a ‘global crisis’.


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