Chapter Two: Poverty

What is poverty?

Poverty is the lack of, or the inability to achieve, a

socially acceptable standard of living.
LACK : The base case situation for the definition
of poverty is that where individuals lack
domination over economic resources.
 For example, an individual may be considered
poor if he/she lacks basic food or shelter or,
equivalently, if he/she lacks income to buy these
basic needs.
POVERTY AS A MATERIAL CONCEPT
• People are poor because they do not have something they
need, or because they lack the resources to get the things
they need.
• NEED
• The first set of definitions understands poverty as a lack
of material goods or services. People ‘need’ things like
such as food, clothing, or shelter.
• LIMITED RESOURCES
• Needs are closely linked to resources every need is a need
for something. Poverty can be taken to refer to
circumstances in which people lack the income, wealth or
resources to acquire or consume things which they need.
• INEQUALITY
• People may be held to be poor because they are
disadvantaged by comparison with others in society.
• DEPENDENCY
• Poor people are sometimes taken to be those who
receive social benefits in consequence of their lack of
means. E.g,,,Beggar
• The sociologist Georg Simmel argued that ‘poverty’,
in sociological terms, referred not to all people on
low incomes, but to those who were dependent:
• The poor person, sociologically speaking, is the
individual who receives assistance because of the lack
of means.
 Cont,,,

 “The human rights approach underlines the

multidimensional nature of poverty, describing
poverty in terms of a range of interrelated and
mutually reinforcing lack, and drawing attention
to the stigma, discrimination, insecurity and
social exclusion associated with poverty”
 Office of the united nations high commissioner
for human rights principles and guidelines for
human rights approach to poverty reduction
strategies .
 Poverty reduction has been commonly certified by
the international community as the overarching
goal of development.
 Less agreement appears to exist on what this
poverty actually is and how it should be measured.
 Different understandings of poverty, different
approaches and ways of thinking about poverty
lead to different ways to tackle it.
 The causes of poverty
A. Corruption
B. Lack of Education
C. Political Instability, Wars, Civil Wars
D. Natural and Geographical Characteristics
 One route for investigating the causes of poverty is to
examine the dimensions highlighted by poor people:
■ Lack of income and assets to attain basic necessities
— food, shelter, clothing, and acceptable levels of
health and education.
■ Sense of voicelessness and powerlessness in the
institutions of state and society.
■ Vulnerability to bad shocks, linked to an inability to
cope with them.
 To understand the determinants of poverty in all its
dimensions, it helps to think in terms of people’s
assets, the returns to (or productivity of) these assets,
and the volatility of returns.
 These assets are of several kinds:
■ Human assets, such as the capacity for basic
labor, skills, and good health.
■ Natural assets, such as land.
■ Physical assets, such as access to infrastructure.
■ Financial assets, such as savings and access to
credit.
■ Social assets, such as networks of contacts and
reciprocal obligations that can be called on in
time of need, and political influence over
resources.
 Models of Poverty: Absolute and Relative
 Whichever conceptualization is used it is possible
to imagine that there is a threshold minimum or
subsistence level under which poverty is
unacceptable (absolute poverty, extreme or
serious poverty).
 Relative poverty is defined by referring to an
unacceptable distance from the average or
median.
 However, even absolute poverty is difficult to
define in other than relative terms.
 Already in 1776 Adam Smith thought that the
minimum publicly perceived acceptable level of
“necessaries” even for “the poorest creditable
person” must have tended to vary and change.
 In those days, it was a linen shirt in Europe - and
leather shoes in England. Now it is no doubt a
mobile phone.
 “Absolute poverty” refers to an unequivocal
standard necessary for survival (calories necessary
for survival, adequate shelter against elements,
proper clothing). „
 Absolute poverty is “a condition characterized by
severe deprivation of basic human needs, including
food, safe drinking water, sanitation facilities,
health, shelter, education and information.
 It depends not only on income but also on access to
social services” (United Nations, Copenhagen
Declaration, 1995).
 Absolute poverty is sometimes called “extreme
poverty.”
 Relative poverty
 “Relative poverty” refers to deprivation that is
relative to the standard of living enjoyed by other
members of society. „
 Even if basic needs are met, a segment of the
population may still be considered “poor” if they
possess fewer resources, opportunities or goods
than other citizens. „
 For example, if most families in a society can
afford 2 cars and a family can afford only 1, they
are considered relatively poor.
 Overall Poverty has various manifestations, including:
• Lack of income and productive resources sufficient to
ensure sustainable livelihoods;
• Hunger and malnutrition;
• Ill health;
• Limited or lack of access to education and other basic
services;
• Increased morbidity and mortality from illness;
• Homelessness and inadequate housing;
• Unsafe environments;
• Social discrimination and exclusion;
• Lack of participation in decision-making and in civil,
social and cultural rights.”
 Poverty defined as a lack of well-being is clearly
multidimensional
 The standard of living, and therefore poverty, may be
represented by a UNI-DIMENSIONAL indicator (e.g.
income) or a MULTI-DIMENSIONAL approach
(e.g. income, health conditions, family status, etc.).
 In the first case, poverty is defined by income poverty
and the standard of living is defined in the space of
economic welfare, a narrower concept than well-being.
 In the second case, the concept of poverty is closer to
well-being, where other welfare indicators support
income in defining poverty.
 The Summit recommended a two-pronged strategy
to attack poverty:
 “National strategies to reduce overall poverty
substantially, including measures to remove the
structural barriers that prevent people from
escaping poverty, with specific time-bound
commitments to eradicate absolute poverty by a
target date to be specified by each country in its
national context. “
 Perspectives on poverty
 Poverty can be defined in very precise technical
terms that facilitate its measurement.
 Poverty can also be characterized in a more
multidimensional – yet less precise – manner that
helps see poverty in relation to its causes, its
context, its consequences and the ways it is
related to phenomena that can be influenced.
 The followings are examples of various approaches
A. Income poverty refers to incomes below a
“minimum subsistence” or 50% or 60% below the
median.
•  The World Bank “absolute” poverty level is
based on minimum incomes needed for basic
necessities in a number of low-income developing
countries.
• In the European Union, relative poverty is
defined as 60% of the median income.
B. Basic needs approach: Poverty is scarcity of
resources and opportunities to satisfy basic
needs:
• The ILO introduced the “basic needs” concept
in the 1970s and 1980s. This concept allowed
for taking into account the availability in the
community of public goods and services when
defining and assessing poverty.  
C. Capabilities approach: poverty and deprivation
are a lack of prerequisites for self-determined life,
“lack of capabilities” to manage one’s life.
 Capabilities are means for achieving good life, to
avoid and escape from deprivations, and to realize
one’s potential.
 Development is a widening of choices,
development is freedom.
 Capabilities refer to both external resources and
options and human capital embedded in the
person her/himself.
 Prevention and reduction of poverty calls for
expanding opportunities, empowerment and
security, so as to enable people to manage their
lives.
 The capabilities that enable people to avoid
poverty, escape poverty and achieve their life
goals are: economic, human, political, socio-
cultural and protective capabilities. Gender and
environment cut across these dimensions.
D. Well-being approach: poverty is the flipside of well-
being, it is bad life, it is ill-being.
 Poverty is seen as a multidimensional lack of resources
and conditions to achieve satisfaction of physical,
social and psychological or self-actualization needs.
 The Finnish sociologist Erik Allardt (in the 1970s)
referred to these dimensions of well-being as
”Having”, “Loving” and “Being”.
 Well-being is a product – not a sum – of these
components. More of one cannot replace scarcity of
the others.
 The increasing Western wealth has already for decades
failed to create more well-being and happiness.  
 Poverty analyses have tended to fail to account for
the social and psychological dimensions of
poverty and deprivation as they are difficult to
measure.
 Thus qualitative analyses are important to improve
understanding of the essence and causes of and
solutions to poverty and deprivation.
 In the case of children it is clear that some
material standard of living is necessary– but not a
sufficient condition for them to grow and develop.
E. Inequality approach: poverty is a process.
 Its essential root causes are embedded in
inequality, insecurity, vulnerability, discrimination
and exclusion.
 Thus the ways to attack poverty are related to
more equal opportunities, decent work, economic
and social security, non-discrimination,
empowerment and making social and economic
institutions more fair and accountable.  
F. Human Rights Based Approach: Poverty is a
violation of basic rights and fundamental freedoms. It is
a multidimensional and comprehensive perspective.
 The human rights approach anchors the criteria for
poverty and deprivation into the non-attainment of
universally agreed, unalienable human rights standards
and principles as the ultimate benchmark to be attained
for all.
 However, norms and legislation alone are not enough to
make rights materialize.
 Equality-oriented comprehensive social policy and good
governance are the necessary instruments for creating
enabling environments for people to avoid poverty and
for moving out of poverty.
 The dynamic nature of poverty
People fall in and move out of poverty
 Understanding poverty as a static state of affairs and
the poor as a stable and restricted group of people is
often misleading. Poverty is often very clearly
seasonal.
 Poverty can result from normal life events when there
is no social security.
 Qualitative studies such as the World Bank “Moving
Out of Poverty” and the studies of the Chronic Poverty
Centre, have shown how people fall into constant
poverty as a result of quite common lifecycle events
that turn terrible when there is no ways of managing
even minor economic shocks.
 On the other hand, there is considerable flow out of
poverty as people strive to escape poverty and many
manage to do it. Social institutions are often the
insurmountable obstacles that block the way.
Example: Income of a family can fluctuate radically due
to various shocks or even quite normal lifecycle events.
When there are no “safety nets” or risk management
systems, a single shock can push the family into a
situation where it will rely on irreversible harmful
coping strategies: selling productive assets (cattle, tools,
land), borrowing money at excessive interest rates,
taking children out of school etc. The latter means that
the children have a high probability of falling into a
disadvantaged position for their entire lifetime.
Types of Poverty: Situational and Generational
 “Situational poverty” refers to people living in poverty
for a short time as the result of circumstance
(unemployment, chronic illness, disability, divorce, or
death of a family member). „
 There is no single path into or out of poverty; many
events throw people into poverty and many events help
people exit from poverty.
 Poverty is a fluid rather than static condition for most. „
 “Trigger events” like changes in household
composition, employment status, and disability status,
are often the cause for entry to or exit from poverty. „
 Employment is the most common event associated with
poverty entry.
 Intergenerational transmission of poverty is common

 Wealth and poverty have a high tendency to

transcend generations. In most country contexts,
to be born in a poor family fate a child to a
lifetime of poverty.
 In only a few countries do opportunities for social
mobility effectively enable people to overcome
this tendency. In the USA, Great Britain, France
and Italy this mobility is low while in the Nordic
countries, parents’ status has the least influence on
the socioeconomic status of children. But, in
Ethiopia,,,,,
 Poverty and Gender
• Gender
– Division of labor (Who does what in the household,
family, and the society)
– Access to resources (Who have access to household
and community resources)
– Decision making power (Who makes the decision in
the household, in the family and the community)

• WID (Women in Development)

• GAD (Gender and Development)
 Remark
 Reducing poverty and eradicating extreme poverty are
broadly accepted goals of development.
 However, most advanced and multidimensional
perspectives on poverty lead to rethinking poverty, poverty
projects, poverty reduction policies and strategies.
 Poverty is an end result of broader developments. And
similarly, poverty reduction is only possible through
transformative economic and social policies.
 There are also deliberate policy choices that sustain
inequality and poverty.
 Poverty is not a choice of poor people. But their poverty
can be a choice of the rich in power. (Ronald Wiman
15.08.2012)