On Monday a trio of American economists—Abhijit Banerjee, Esther Duflo, and Michael Kremer—won the Nobel Prize in economics for “their experimental approach to alleviating global poverty.” As the Nobel Committee says, “The research conducted by this year’s Laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.” The Committee also claims the work of these economists has “great potential to further improve the lives of the worst-off people around the world.”
In honor of their achievement, which has, as the Committee claims, “great potential to further improve the lives of the worst-off people around the world,” here are nine things you should know about global poverty.
1. Poverty is most commonly defined by economic standards, based on income levels and access to basic human necessities, such as food, water, and shelter. Global poverty refers to the various levels of poverty across the globe. Because poverty differs significantly between poor and wealthier countries, it is often broken down into the two main classifications of absolute and relative.
2. 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 services. Most countries in the world measure their poverty using an absolute threshold. Absolute poverty is often described with a scale, ranging from extreme to moderate levels. Extreme poverty was defined in 1991 as the “dollar-a-day line.” In 1993, the line changed to $1.08 per day, and was revised again in 2005 to $1.25. Currently, since 2015, the international poverty line has been set at $1.90 a day. The increase reflects the purchasing power at a specific time and makes it easier to compare levels of poverty across years or decades.
3. Relative poverty is condition where household income is a certain percentage below median incomes. For example, the threshold for relative poverty could be set at 60 percent of national median incomes. The poverty threshold in the United States and in many European countries is based on a relative standard. Compared to absolute poverty, relative poverty is less likely to decline and more likely to remain persistent, since it is based on median income, which tends to increase with economic growth.
4. In 1820, the vast majority of the global population of 1.1 billion lived in extreme poverty, and only a tiny elite enjoyed higher standards of living. As Max Roser and Esteban Ortiz-Ospina explain, over the next 150 years poverty declined due largely to economic growth. Yet that growth was not fast enough to offset the rapid rise of the world population. The result is that both the number of non-poor and poor people increased. Since around 1970, though, the number of non-poor people has been rising, while the number of extremely poor people is falling.
5. In 1990, the UN’s Millennium Development Goals included a target of halving poverty by 2015. That goal was achieved five years early. In 1990, more than one-third (36 percent) of the world’s population lived in abject poverty; by 2010 the number had been cut in half (18 percent). According to the most recent estimates, in 2015, the number had dropped to 10 percent. Since 1990, nearly 1.1 billion fewer people are living in extreme poverty. In 2015, 736 million people lived on less than $1.90 a day, down from 1.85 billion in 1990. “On every day in the last 25 years,” Roser and Ortiz-Ospina say, “there could have been a newspaper headline reading, ‘The number of people in extreme poverty fell by 128,000 since yesterday.’”
6. While poverty rates have declined in all regions, according to the World Bank, progress has been uneven. Two regions, East Asia and Pacific (47 million extreme poor) and Europe and Central Asia (7 million) have already achieved the 2030 goal by reducing extreme poverty to below 3 percent. More than half of the extreme poor currently live in Sub-Saharan Africa. Rather than declining, the number of poor in that region increased by 9 million, with 413 million people living on less than $1.90 a day in 2015, more than all the other regions combined. If the trend continues, says the World Bank, by 2030 nearly 9 out of 10 extreme poor will be in Sub-Saharan Africa.
7. Even if the UN and World Bank target of “eradicating extreme poverty” is reached it won’t mean that no one on earth is living in living in extreme poverty. Just as “frictional unemployment” (about 4 percent) exists when there is “full” employment, “frictional poverty” (around 3 percent to 8 percent) will continue even when extreme poverty has been “ended.” That works out to be about 664 million people still living in poverty—approximately double the current population of the United States—out of an estimated 8.3 billion people on the planet.
8. A Barna Group survey in 2014 found that more than 8 in 10 Americans (84 percent) are unaware global poverty has reduced so drastically, and more than two-thirds (67 percent) say they thought global poverty had risen since the mid-1980s. Additionally, more than two-thirds of U.S. adults (68 percent) say they do not believe it’s possible to end extreme global poverty within the next 25 years. One exception to this pessimism is practicing Christians. Defined by Barna as people who have attended a church service in the past month and say their religious faith is very important in their life, practicing Christians younger than 40 are the most optimistic at nearly half (48 percent), with practicing Christians older than 40 slightly higher than the general population (37 percent compared to 32 percent of all adults).
9. Another Barna Group survey found that a strong majority of the American public (88 percent), including 92 percent of practicing Christians, trust the opinion of a pastor when it comes to the issue of global poverty. The perspective of pastors on the issue is as trusted as the opinions of individuals who have worked or lived in poverty and ranks above the opinions of reporters, academics, and politicians. As Barna concludes, “pastors have incredible potential to lead the charge and position the U.S. church as a powerful force in anti-poverty endeavors—whether they like it or not.”