Poverty Eludes Definitions Poverty is not so easy to define. Nor is it a simple matter to understand what the varied indices of poverty represent. What is categorized as “poor” in the West, for example, might be considered “middle class” in a developing nation.

“The world’s poor” is shorthand for a vast and diverse swath of people who have low incomes, to be sure. They struggle with problems like hunger, ill health and what would be considered inadequate housing by Western standards. They live in remote villages and urban shantytowns. They have problems finding enough to eat and clean water to drink. Many poor children don’t go to school, but rather work — as household service providers, subsistence farmers, casual laborers and street vendors.

Many poor are from underrepresented ethnic minorities – often internal or international migrants who have moved to an area where they lack clear legal status. Some have been displaced by war or civil unrest. Others are indigenous peoples who have been excluded by a dominant ethnic group. In general, the poor are disproportionately women.¹

Around half the people in urban areas worldwide live in makeshift homes in squatter settlements and work in the informal economy, which is to say outside a formal legal structure. An even larger absolute number of poor live in isolated rural areas with limited secure access to land and other resources.²

As Hernando de Soto points out, we in the developed West are a distinct minority in that we live far better than most people on earth. The UN reports that:³

• More than 2.6 billion people — over 40 percent of the world’s population — do not have basic sanitation.
• More than one billion people still use unsafe sources of drinking water.
• Four out of ten people in the world don’t have access to a simple latrine.
• Five million people, mostly children, die each year from water-borne diseases.
• More than 800 million people go to bed hungry every day. 300 million are children.
• Of these 300 million children, eight percent are victims of famine or other emergency situations. More than 90 percent are suffering long-term malnourishment and micronutrient deficiency.
• Every 3.6 seconds another person dies of starvation and the large majority of those deaths are children under the age of five.

There are billions whom no one can mistake for “middle class.” The World Bank says there are 1.4 billion people living on less than $1.25 a day, almost 2.6 billion live on less than $2 a day. Almost every major reporting agency considers this situation extreme poverty.⁴

Most organizations use poverty thresholds to compare poverty between countries or determine the extent of poverty within a country. A poverty threshold is basically the minimum level of income a person or family would need to maintain an “adequate standard of living” in a given country.

There are also a few absolute thresholds, such as the amount of calories necessary to be able to sustain a human body for a day.

Finally, there are also relative poverty thresholds. In these, poverty is defined in reference to others in the same area. Relative thresholds most commonly calculate the percentage of a population with an income less than the median for that region. As such, relative poverty is also a measure of income inequality, but it can lead to widely varying definitions of what is a median income or quality of life.

In 2007, for example, in the United States of America, the poverty threshold for a single person under 65 was $10,787; the threshold for a family group of four, including two children, was $21,027.⁵ But in some African countries, the poverty line can be as low as $600 per year.

Some argue that such measurements inappropriately equate poverty with inequality. Others argue these measures can be arbitrary with respect to whether the poorest are satisfying their basic needs. In any case, there are several other widely cited income inequality metrics, including the Gini Coefficient and the Theil Index.