What is Poverty? The Stakes of a Good Definition

November 10, 2015
A "good" definition of poverty is crucial to understand who citizens, organisations and governments should help. Understanding what poverty is also helps us identifying problems in our modern, complex societies where social exclusion plays a great role.

The definition of poverty, according to Encyclopedia Britannica (2008):

“The state of one who lacks a usual or socially acceptable amount of money or material possessions. […] Whatever definition one uses, authorities and laypersons alike commonly assume that the effects of poverty are harmful to both individuals and society."

Over 200 years ago, Adam Smith (father of modern economics) saw in poorness not just a problem of having access to the basic necessities to support one’s life, but also a social handicap. In this sense poverty is about being able to follow the customs of a given society and country, because it’s essential to be part of it.

Poverty as a social handicap

Social exclusion, or marginalization, then becomes an essential element for understanding what is poverty. In many cases indeed, if you don’t have a suit, a nice shirt or any decent outfit, you’re very unlikely to be offered a job and your situation will only get worse. You now understand that giving a universal definition of poverty is quite impossible as it’s an issue that depends on social norms. Secondly, the question of the definition of poverty refers to the problem of measuring poverty.

But measuring poverty where ? In what context ? Surely, inner-city poverty is radically different than rural poverty. And yet you're about to find out that governments often don't make the difference. Often on purpose.


Economic development

Urban poverty and slums in Cambodia
‍Urban poverty and slums in Cambodia

A definition of poverty by its solution

If economic development used to be associated with growth, it is now the spearhead of the war on poverty. Therefore, thinking about what is poverty is nowadays becoming tied to thinking about economic development’s hurdles.

That’s also the reason why the World Bank is now a self-proclaimed world fighter against poverty, with its slogan: “Our dream is a world free of poverty”. The UN as well has its own program aimed at reducing “by half, between 1990 and 2015, the proportion of people whose income is less than $1 a day”: the Millennium Development Goals. So… let’s observe the connection between the question "What is poverty?" and the notion of economic development.

Poor capital, labor and infrastructure

The general assumption is that the causes of poverty are rooted in a nation’s weak forces of production, capital, labor etc. The definition of poverty is then characterized by a general lack of infrastructure, institution, technology and education.

But these people forget that economic growth alone is not enough. There is plenty of examples out there of insanely rich countries with insanely high levels of poverty. This is because poverty also stems from flaws in the redistribution of a country’s wealth.

The 1% vs. the 99% ?

If the capital owners keep all the revenues to themselves and don’t raise salaries, then nothing changes except that 1% of the population gets rich as hell. So what matters here is to look at the mean of growth, to make sure that everyone participates in a country's growth and benefits from it.

This makes the measurement of poverty an even more central and complex issue: you can’t just look at a country’s GDP anymore. If a government is serious about improving its measurement and definition of poverty, it should use a diversity of research tools - quantitative and qualitative (such as field interviews) - so as to best get what is poverty in its country.

What is poverty: science vs politics

The social damage of urban poverty
‍The social damage of urban poverty

Cost of life and food

The scientific tradition that sets poverty lines usually focuses on the cost of life and especially on food. The reason is that the poorest of the poor (i.e. in poor countries) spend on average up to 75% of their budget on food. The problem is that, as you’ve seen so far, poverty is a very blurry and “elastic” notion.

The needs of the poor in Burundi are entirely different than that of the ones in Mexico which are also somewhat unrelated to that of Northern Americans. To some extent.

Food or Internet?

Those needs range from food, indeed, but also clothing (think about Russia’s poor), proper shelter (protection from snow or tropical storms), but also goods that are necessary to one’s participation in social life (remember, exclusion is also poverty): radio, TV, Internet.

In many countries, several social services are now only available online. No computer? no Internet? Say goodbye to social benefits, higher education and so on. Still… You can rightfully argue that you won’t die out of lack of Internet. Even if more and more people seem to think so.

How much food is enough?

The result however is that too many countries keep on setting their national poverty lines along with the cost of the necessary amount of food needed per day. How do they calculate that? The international scientific norm is that an adult needs some 2,000 calories a day. But even this line is somewhat wrong since it totally disregards the importance of a varied nutrition and the different cost of eating fish, fruits and vegetables in opposition to simple wheat or cereal intake.

The lack of particular vitamins or minerals itself leads to countless diseases regarded as effects of poverty. But where politics come into play and meddle in the question of what is poverty, is that if governments were to take into account a diverse nutrition as well as essential goods, their respective proportions of poor in the population would literally skyrocket, in rich and poor countries alike.

The limits of the poverty line

Poverty lines are useful to compare poverty from country to country and get a general picture of the problem at the global level. The problem with poverty statistics and poverty lines is however that their computing is widely contested by experts, who complain about the same political manipulations I've just talked about.

The biggest issue with any poverty line such as the $1.25-a-day one is that anybody living with less than $1.25 a day is indeed considered poor, but those earning $1.30 or $1.45 per day are not counted as poor. There are millions and millions of them and they are considered safe from precariousness. In that case, the most accurate poverty line ever would still be an inappropriate measure to understand what is poverty.

Relative or absolute poverty?

Of relative and absolute poverty

What is poverty - a form of exclusion

Amartya Sen, one of the most famous researchers on the topic, has given a more appropriate definition of poverty that completes Adam Smith’s approach. He defined poverty as the lack of what one needs to live within a society. In the broadest sense, it means survival but also contribution and participation to social daily activities.

You may have enough food or water but not the proper environment or education (hygiene) that will let you enjoy it. Diarrhea for example is a major cause of child death: 1.5 million per year . You may have enough money to buy a computer but not the required infrastructure to have the Internet in your neighborhood or even the electricity.

It's about relative vs absolute poverty

Luckily and because this definition of poverty is already a few decades old, the biggest international institutions started paying more attention to the varied nature of poverty.

The United Nation’s Human Development Index is a good example since it's calculated with three values: income, life expectancy and literacy. Such answer to what is poverty helps us think about relative poverty, in opposition to absolute poverty, i.e. the total absence of the most basic needs (food, health care, shelter…).

Types of poverty

Institutional poverty

This is when the government is unable to get its citizens and private companies to pay their taxes. This creates a poverty cycle whereby national institutions constantly lack money. Public servants are then underpaid, the most qualified ones try to get a job elsewhere and the rest do not have much motivation to do their job either. This is a great incentive to indulge in corruption...

The national and local authorities are in turn unable to maintain in good state or expand basic infrastructures such as water pipes, as well as provide basic services like education or health care. Finally the sum of all this makes the government powerless when facing issues of regulating, promoting, or expanding sectors that would need basic infrastructure investment.

This whole aspect makes the private sector at large turn away from regular, official ways of doing business. An informal sector often thrives on conditions like this and businesses find their own way to get things done… which means a lot more corruption and no control over the risk of monopolies or even violence.

Individual poverty

Non-existent legal employment means more risks and fewer rights for average workers. Usually they won’t be covered for work-related accidents, no health care or pension plan, no contract (possibility to be sacked at any time), no protection against any abuse at work: harassment, violence, unpaid overtime or simple exploitation.

A good deal of individual poverty stems directly from consequences of institutional poverty, such as the lack of access to the basic services mentioned above. Lack of education fosters more poverty and impossibility to climb up the social ladder; restricted access to health care causes diseases to spread wildly across the population. An unintended result is a dangerous lack of confidence in the government… a crisis of legitimacy for this one.

In order to survive people have to rely on their wit and catch-as-catch-can skills, which can definitely reinforce bonds within a community, but on a bigger scale it also nurtures an environment where everyone tries to take advantage of one another… and loses confidence in each other. This last aspect of impoverishment shows that asking "what is poverty" can be boiled down to an institutional failure, as most of individual poverty stem from from a system's dysfunction.

What is urban poverty?

Why a specific definition?
‍Why a specific definition?

Urbanization is generally viewed as an essential factor in reducing poverty and mostly developing an economy. All over the world cities are growing and more and more people live in urban areas. Economic theories argue that this shift in world populations will, as a consequence, help develop rural areas.

Incompetence and lack of city planning

While this might be true, another problem is also occurring: the growth of urban poverty, in many cases for the plain reason that city planners have not been… planning, not well enough at least. And in most cases not enough accommodation was built for the few millions trying to live in town, and no one either managed to create enough jobs for everybody. However, if in some cases there have been economic opportunities for the newcomers, the stacking up of people in slums is a geographical catastrophe in itself and an extremely effective way to spread diseases and crime.

Are we any closer to understanding what poverty is now? From that angle it's the crystallization of political incompetence and disregard for a population's needs. On top of that, for the poorest of them, urban dwellers can’t even go back to their rural hometowns because they can’t even afford it anymore. Yet this phenomenon is still fairly recent, and if you're interested click here to read more on urban poverty.

So... what is poverty?

This page should have given you a pretty broad answer to the question of “what is poverty” by introducing the definition of poverty in absolute vs. relative terms and the more recent approach of it as an economic and developmental issue. And it should have also helped you keep in mind that growth-obsessed policies are not always good for the poor - if they can’t benefit from it.

Using safety nets and subsidies

A growth approach should be complemented with systems promoting its fair redistribution, safety nets to fight social exclusion and destitution, private sector subsidies (in particular SMEs) and channeled private investments in appropriate sectors. 

In other words, make market competition work for everybody, for example expand the telecommunications network to unserved and not yet profitable populations.

This is all the more important as developing countries often come out weakened by the recent waves of privatization and liberalization of their economies led by the WTO (World Trade Organization) and the World Bank. Counter-balancing those worsening effects is one of the main challenges of policymakers worldwide.

So what is poverty if indeed a development problem? Our civilizations have evolved into more and more complex societies and systems which only a few really understand. But problems such as lack of political will and poor management of resources have remained unsolved throughout History and political regimes.


  • Rewarding the Work of Individuals: A Counter-Intuitive Approach to Reducing Poverty and Strengthening Families, Gordon L. Berlin, The Future of Children 2007
  • Dismantling the Poverty Trap: Disability Policy for the Twenty-First Century, David C. Stapleton, Bonnie L. O'Day, Gina A. Livermore, Andrew J. Imparato, The Milbank Quarterly 2006
  • Do Social-Welfare Policies Reduce Poverty? A Cross-National Assessment, Lane Kenworthy, Social Forces 1999
  • How Robust Is a Poverty Profile?, Martin Ravallion and Benu Bidani, The World Bank Economic Review 1994
  • Globalization and the Human Development Trap, David Mayer-Foulkes, The Poor under Globalization in Asia, Latin America, and Africa 2010
  • Poverty and Disequalization, Dilip Mookherjee, Debraj Ray, Journal of Globalization and Development 2010
  • Measuring Poverty and Differences in Family Composition, A. B. Atkinson, Economica 1992
  • Poverty Spending and the Poverty Gap, Daniel H. Weinberg, Journal of Policy Analysis and Management 1987
  • Poverty, time and vagueness: integrating the core poverty and chronic poverty frameworks, David Clark and David Hulme, Cambridge Journal of Economics, 2009
  • The Changing Nature of Poverty, Martha S. Hill, Annals of the American Academy of Political and Social Science 1985
  • The Poverty of Liberal Economics, David Brady, Socio-Economic Review 2003


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Dario B.

I'm a digital strategist, researcher & filmmaker. A technophile and keen traveller, I have a lifelong passion for visual storytelling, writing and making complex systems easily understandable through new media.

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