What is poverty?
Poverty is a condition of deprivation characterized by a lack of access to essential resources and basic necessities required for a healthy and dignified life.
Historically, poverty has been defined based on a person’s income and how much they can buy (monetary poverty). However, poverty can also be assessed using multidimensional measures that consider holistic factors impacting people’s quality of life.
Improper nutrition resulting from poverty can cause stunting and wasting, permanently impacting children’s development. Lack of access to clean water and sanitation in impoverished regions can lead to the spread of preventable diseases and unnecessary deaths, especially among children. And children living in poverty often face obstacles to accessing quality education, which can perpetuate the cycle of poverty from one generation to the next.
What is extreme poverty?
Extreme poverty is the most severe form of poverty, involving the acute deprivation of basic human needs. The World Bank classifies anyone living on less than $2.15 a day as living in extreme poverty.
What is multidimensional poverty?
Multidimensional poverty refers to a broader understanding of poverty that goes beyond income. It takes into account various factors such as access to education, healthcare, clean water, and sanitation.
The Global Multidimensional Poverty Index, developed in 2010 by the U.N. Development Programme and the Oxford Poverty and Human Development Initiative, offers a comprehensive framework for assessing poverty. This index evaluates people across 10 key indicators, including nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, and assets. If a person lacks access to three or more of these standards, they’re identified as multidimensionally poor. The index offers insights into specific interventions needed to address poverty effectively in each country.
How is poverty measured?
Poverty is measured by each country’s government, which gathers data through household surveys of their population. While entities like the World Bank may provide support and conduct their own surveys, the primary responsibility lies with each country. However, traditional data collection methods can be slow and time-consuming. To overcome this, high-frequency surveys are using estimates and mobile phone technology to quickly gather data and provide insights.
What is a poverty line?
A poverty line, also called a poverty threshold, is a set amount of income below which it becomes difficult, if not impossible, for people to afford essentials like food and shelter. Each country determines its poverty line by calculating the cost of meeting minimum needs. Households with incomes below this line are considered to be living in poverty.
The international poverty line serves as a standard for measuring extreme global poverty and was recently adjusted to $2.15 a day to reflect the rising cost of necessities and adjust for inflation. Since 1990, it has increased from $1 to $2.15, reflecting the rising cost of living.
Is the poverty line the same in every country?
No, countries calculate their poverty lines based on their unique economic and social circumstances.
For example, the poverty line in the United States is determined based on data from the U.S. Census Bureau and is updated using the Consumer Price Index to reflect recent price changes. As of 2024, the poverty line stands at $31,200 (annual income) for a family of four, and $15,060 for one person.
What are the causes of poverty worldwide?
Poverty has multiple root causes beyond just a lack of basic necessities like food, shelter, education, or healthcare. Discrimination based on gender or ethnicity, poor governance, conflict, exploitation, and domestic violence are all factors that contribute. These inequities trap people and communities in poverty, and limit access to social services that could help people overcome it.
Poverty tends to be most entrenched in fragile contexts, which are regions or entire countries where political instability, past or present conflicts, corrupt leaders, and poor infrastructure limit access to the basic resources people need to thrive.
What is the cycle of poverty? Poverty can be difficult to escape because it is cyclical. Without access to essentials like clean water, healthcare, education, and financial resources, people living in poverty have few opportunities to change their circumstances, creating a cycle that persists for generations.
When families lack the means to send their children to school, those children struggle to earn an income as adults — and therefore can have a hard time sending their own kids to school. In communities lacking access to clean water, women and girls are often forced to spend many hours each day gathering water, leaving little time for school or a livelihood, limiting their prospects for the future. In communities without nearby medical facilities, families lose income when parents take time off work due to their own illness or to care for sick loved ones. Each aspect of poverty can impact the others, perpetuating the cycle indefinitely.
Natural disasters and conflict can exacerbate this cycle, putting vulnerable communities at greater risk. When these crises strike in areas without strong public institutions, families may lack the resources to recover, thus further entrenching them in poverty.
Taken from; World Vision .org Global poverty: Facts, FAQs, and how to help.
Global poverty is one of the most pressing problems that the world faces today. The poorest in the world are often undernourished, without access to basic services such as electricity and safe drinking water; they have less access to education, and suffer from much poorer health.
In order to make progress against such poverty in the future, we need to understand poverty around the world today and how it has changed.
‘Key Insights on Poverty‘ Measuring global poverty in an unequal world There is no single definition of poverty. Our understanding of the extent of poverty and how it is changing depends on which definition we have in mind.
In particular, richer and poorer countries set very different poverty lines in order to measure poverty in a way that is informative and relevant to the level of incomes of their citizens.
For instance, while in the United States a person is counted as being in poverty if they live on less than roughly $24.55 per day, in Ethiopia the poverty line is set more than 10 times lower – at $2.04 per day.
To measure poverty globally, however, we need to apply a poverty line that is consistent across countries.
This is the goal of the International Poverty Line of $2.15 per day which is set by the World Bank and used by the UN to monitor extreme poverty around the world.
We see that, in global terms, this is an extremely low threshold indeed – set to reflect the poverty lines adopted nationally in the world’s poorest countries. It marks an incredibly low standard of living – a level of income much lower than just the cost of a healthy diet.
Global extreme poverty declined substantially over the last generation Over the past generation extreme poverty declined hugely. This is one of the most important ways our world has changed over this time.
There are more than a billion fewer people living below the International Poverty Line of $2.15 per day today than in 1990. On average, the number declined by 47 million every year, or 130,000 people each day.
The scale of global poverty today, however, remains vast. The latest global estimates of extreme poverty are for 2019. In that year the World Bank estimates that around 650 million people – roughly one in twelve – were living on less than $2.15 a day.
Hundreds of millions will remain in extreme poverty on current trends Extreme poverty declined during the last generation because the majority of the poorest people on the planet lived in countries with strong economic growth – primarily in Asia.
The majority of the poorest now live in Sub-Saharan Africa, where weaker economic growth and high population growth in many countries has led to a rising number of people living in extreme poverty.
The chart here shows projections of global extreme poverty produced by World Bank researchers based on economic growth forecasts.
A very bleak future is ahead of us should such weak economic growth in the world’s poorest countries continue – a future in which extreme poverty is the reality for hundreds of millions for many years to come.
After 200 years of progress the fight against global poverty is just beginning Over the past two centuries the world made good progress against extreme poverty. But only very recently has poverty fallen at higher poverty lines.
Global poverty rates at these higher lines remain very high:
25% of the world lives on less than $3.65 per day – a poverty line broadly reflective of the lines adopted in lower-middle income countries.
47% of the world lives on less than $6.85 per day – a poverty line broadly reflective of the lines adopted in upper-middle income countries.
84% live on less than $30 per day – a poverty line broadly reflective of the lines adopted in high income countries.
Economic growth over the past two centuries has allowed the majority of the world to leave extreme poverty behind. But by the standards of today’s rich countries, the world remains very poor. If this should change, the world needs to achieve very substantial economic growth further still.
The history of the end of poverty has just begun
The decline of global poverty is one of the most important achievements in history, but the end of poverty is still very far away.
The majority of the world is poor Other high-income countries adopted poverty lines very similar to Sweden’s poverty line of $30 a day. And as I documented before, the size of social care payouts and proposals for Universal Basic Incomes are also around $30 per day. Just like the UN relies on the $1.90 per day poverty line to track ‘extreme poverty’, I therefore rely on the $30 a day threshold as a definition for ‘poverty’. It is based on the notion of who is considered poor in the world’s richer countries.
Taking into account the different price levels across countries, the latest statistics show that 85% of the world population live below this poverty line. This large visualization shows where they live. The height of the purple bar corresponds to the share in poverty in each country.
I ordered the countries by income: from the poorest countries on the very left to the richest countries on the right. The width of each country corresponds to the country’s population size.
The only countries in which not nearly everyone lives in poverty are high-income countries. GDP per capita is a measure of average income that not only takes people’s individual incomes, but also government expenditure, into account. As noted in the chart, in all countries that have a GDP per capita of less than $30,000 the majority of the population lives in poverty.
But the data also shows that in all countries a significant share lives in poverty. No country, not even the richest countries, has eliminated poverty. There are no ‘developed’ countries, there is work to do for all.
How far away are we from a world in which no one lives on less than $30 a day? The economic history of today’s richest countries shows that widespread poverty is not inevitable. What needs to happen to achieve the same for all people in the world?
The share in poverty in any country depends on two factors: the average level of income and the level of inequality.
Some countries reduced inequality successfully and thereby reduced poverty. Lower inequality in the future can further reduce poverty. But because the average income in the majority of countries in the world is much lower than $30-poverty-line, strong growth is necessary for global poverty to decline.
I calculated that at a minimum the world economy needs to increase five-fold for global poverty to substantially decline. This is in a scenario in which the world would also achieve a massive reduction in inequality: inequality between all the world’s countries would disappear entirely in this scenario. It should therefore be seen as a calculation of the minimum necessary growth for an end of poverty.
A five-fold increase of the global economy is certainly not easy to achieve, but it is also not impossible – it is what the world has achieved in the last 5 decades, and the climate researchers of the IPCC expect even more growth for this century in their ‘Sustainability Scenario’, the scenario in which the world is most successful in avoiding climate change.
That all of the world will live on more than $30 a day might be hard to imagine right now. But then it’s good to remember that today’s reality in high-income countries was also entirely unimaginable very recently.
Two centuries of progress and still a very long way to go The final chart summarizes the global history of poverty. It focuses on the last two centuries when humanity left the stagnation of the past behind and achieved growth for the first time.
The world made good progress – in the last decade the share that lives on less than $10 per day has declined by 10 percentage points – but the chart also shows that much progress is still needed. 62% live on less than $10 per day and 85% live on less than $30.
The global data makes clear why the world needs much more growth to end poverty. The world as a whole today is in a situation not so different from Sweden a century ago. The majority of the world left extreme poverty behind, but is still far poorer than $30 a day.
Even after two centuries of the global fight against poverty we are still in the early stages. The history of global poverty reduction has only just begun.
Note: The World Bank has updated its poverty and inequality data
The data in this article uses a previous release of the World Bank’s poverty and inequality data in which incomes are expressed in 2011 international-$.
The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).
This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.
Economic growth and declining poverty Knowing how the income of the ‘average’ person has changed is of course not enough to infer what has happened to poverty. To do this, research on the distribution of income over time is needed – not just growth, but also inequality matters for how poverty changes.
Just as the increase in average incomes over this period is very clear from the historians work, so too is the increase in global inequality. Whilst many Western European countries, the US, Australia, and Canada saw rapid economic growth throughout the 19th and 20th century, other regions lagged behind. It was only in the second half of the 20th century that low-income countries began to see growth rates comparable to, and eventually even higher than, those seen in rich countries. Many countries, particularly, but not only, in Africa, are still being left behind in terms of economic prosperity as the chart shows. Exploitative colonialism is one of the institutions that is to blame that poverty in these regions did not decline earlier as we know from the studies of economic historians that rely on the work that is the topic of this text. The progress against the worst poverty that people in Asia, Latin America, and Africa have made in recent decades became possible thanks to the end of colonialism.
As well as reconstructing GDP estimates, economic historians also use historical sources to infer the extent of inequality within countries from historical sources. Putting these two components together allows us to construct the evolution of the entire global distribution of income.
The resulting picture of combining both aspects – average income and inequality – is shown in the visualization below. In this chart we can learn three things. Firstly, the overall volume of the distribution increases, representing the growth in world population, from around 1 billion to over 7 billion. Secondly, we see that between 1800 and 1975 the distribution of incomes in Europe shifted to the right and out of extreme poverty, whereas Asia and Pacific’s growing population remained mostly below the extreme poverty line. In recent decades, rising incomes in Asia bridged the divide between the two peaks of the global distribution visible in 1975. In doing so, hundreds of millions left extreme poverty behind and the share of the population living on less than the extreme poverty line declined.
The chart is plotted on a logarithmic inequality and this needs to be kept in mind when thinking about global inequality: economic inequality in the world today is vast, higher than in many of the most unequal countries in the world.
The number of people in extreme poverty Around 700 million people remain in extreme poverty today, as represented by the volume to the left of the extreme poverty line in the chart above. Indeed, we see that a broadly comparable number of people are in extreme poverty today as they were in 1800. The difference is that in 1800, almost all the world’s 0.9 billion inhabitants were living in extreme poverty, whereas today, this represents less than 10% of the world’s population. The number of people who are not in extreme poverty has increased more than 50-fold.
You can see this more clearly in the chart here. Via the settings, you can switch from absolute numbers to percentages. Whilst the proportion of the world’s population living in extreme poverty has been falling consistently since 1820, it is only in recent decades that this has translated into a decline in the number of people living in extreme poverty.
The history of global living conditions can serve as a reality check There is a long tradition in economics of focussing on income or consumption as a key metric. But everyone – economists included – would agree that other things matter too, and indeed often matter much more: good health, education, human rights, leisure time, mental health, life satisfaction, and many other aspects – the list is long.
It is because the list is so long that we are working on a very broad number of global problems here on Our World in Data. Across our website we have more than 100 entries and show more than 3,000 other charts presenting the evidence on global living standards and the environment over time, across many, many dimensions that matter to people.
And this too is the reason why our ‘Short history of global living conditions’-chart shows six charts, each capturing a different aspect of global development over the last two hundred years. Extreme poverty is an important one, but it is shown next to other important metrics.
Whilst conceptually distinct from the economist’s notion of income, we see that many – but by no means all – of these dimensions are in fact correlated with it and, as such, have also shown dramatic improvements over the last two hundred years.
What has happened in nutrition, health and education can also be viewed as a reality-check on the extreme poverty chart. These substantial improvements in several dimensions have made each other possible and the substantial fall in extreme poverty was a key development in this aspect of global change.
What we learn from this In considering long-run global poverty trends, people are at times too quick to present arguments on what has brought about progress, and what has undermined it. Some champion the increased role of the state, through social spending or the broader management of the economy. Others emphasize globalized trade and free markets. These debates on why this has happened are important, but they are not the same as the historical work that establishes what has happened.
In order for this discussion to be sound and helpful, we first need to know how income and consumption around the world have in fact changed over time. Thanks to the sustained academic research of hundreds of historians, we can. This research clearly shows that the share of people extreme poverty rate has declined over the last two hundred years. The fact that such a large share of the world population is living in poverty is unacceptable. The fact that we can make progress against poverty means that we do have to accept it.
This research matters. For many – including us – ending extreme poverty is one of the most important tasks for our time and our generation. But just as with climate change, global health, or demographic challenges, any meaningful debate concerning how we should pursue this goal requires all the participants to understand the best evidence on how poverty has changed over time, and what these numbers represent. Otherwise, we cannot hope to be helpful.
Extreme poverty: How far have we come, and how far do we still have to go? The world has made immense progress against extreme poverty, but it is still the reality for almost one in ten people worldwide.
Two centuries ago, the majority of the world population was extremely poor. Back then, it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible, and poverty can decline. The world has made immense progress against extreme poverty.
But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the ‘international poverty line’ highlights – this metric plays an important (and successful) role in focusing the world’s attention on the very poorest people in the world.
The poorest people today live in countries that have achieved no economic growth. This stagnation of the world’s poorest economies is one of the largest problems of our time. Unless this changes, hundreds of millions of people will continue to live in extreme poverty.
The state of poverty today There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their families.
The definition of poverty differs from country to country, but in high-income countries, the poverty line is around $30 per day.
Even in the world’s richest countries, a substantial share of people – between every 10th and every 5th person – lives below this poverty line.
In the map below, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country differences in the price level. The expandable section below the map provides a more detailed explanation of how.
The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days, hunger was widespread, and every second child died no matter where in the world it was born.
Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they “could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.”
The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture.
Economic growth made it possible to leave poverty behind Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available.
Growth means that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced.
Because the total production in an economy equals the total income in that country – as everyone’s spending is someone else’s income – incomes grow at the same rate as production increases.
The 9 charts show the data for different regions in the world. On the horizontal axis of each chart, you find the average income (GDP per capita) and on the vertical axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.11 Since then, all world regions achieved growth – the production of goods and services increased – and the share living in poverty declined.
The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating The history of extreme poverty is, at the same time, one of humanity’s greatest achievements and failures.
The majority of the world left extreme poverty behind. To me, this ranks among the most impressive and most important achievements in humanity’s history.
But, as we’ve seen, the fight against extreme poverty is far from over. Almost one in ten people still live in extreme poverty right now.
The worry with extreme poverty today is that some of the world’s poorest countries are not growing. Unless this changes, hundreds of millions of people will continue to live in extreme poverty.
Crucially this was true before the pandemic hit – even before COVID, researchers expected that half a billion people would remain in extreme poverty by 2030. The global recession that followed the pandemic exacerbated this further.
When it comes to the consequences of climate change, this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.
The economic stagnation of some of the world’s poorest countries is not as widely known as it should be. I think it deserves more attention. If the stagnation of the very poorest economies persists, we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world’s very poorest people remain in extreme poverty.
Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.
Taken from; Our World in Data .org ‘Poverty’