What is poverty? It’s not as simple as you think

Updated Apr 05, 2023
Poverty, in the simplest sense of the word, is a state where one lacks access to basic needs such as food, clothing and shelter. It is also used to describe a person whose living conditions prevent them from being able to acquire education, seek medical help, secure a stable job, and participate in recreational activities due to a lack of money.

Poverty is not just about money, though. It is a bigger conversation about marginalization, exclusion, and domestic and international economic indicators. Learn more about these complexities and how World Vision has been partnering with donors to reduce poverty in the world’s most vulnerable places.
  1. What is the definition of poverty?
  2. What is the difference between absolute poverty and relative poverty?
  3. Is poverty only about money?
  4. Which places around the world are most affected by poverty?
  5. Which are the poorest countries in the world?
  6. How many children around the world live in poverty?
  7. How does poverty affect children?
  8. What can I do to reduce poverty?
  9. What is World Vision doing to combat poverty around the world?
  10. Is child sponsorship an effective way to reduce poverty?

1. What is the definition of poverty?

Essentially, poverty refers to lacking enough resources to provide the necessities of life—food, clean water, shelter and clothing. But in today’s world, that can be extended to include access to health care, education and even transportation. In government circles, poverty is often further defined as “absolute poverty” and “relative poverty” (more on that below).

Every country has its own measure for poverty. However, a widely recognized authority on the topic of “extreme poverty” is the World Bank. The Bank keeps a metric called the International Poverty Line and, as of 2015, set the definition of extreme poverty as those who live on less than US$1.90 per day. (Those living on between $1.90-$3.10 per day are classified as the “moderate poor.”) This number is based on the monetary value of a person’s consumption rather than income alone.

In September 2022, the World Bank periodically updated the global poverty lines using new purchasing power parities (PPPs). The $2.15 per person per day extreme poverty line replaces the $1.90 poverty line, based on 2017 PPPs. 

A baby boy getting his physical measurements taken at a community centre.
Among people living in extreme poverty or those who live on less than $2.15 per day, children are the most vulnerable. According to UNICEF, the poorest children are twice as likely to die in childhood and are prone to develop fewer skills for the workforce. Photo: Scovia Faida Charles

2. What is the difference between absolute poverty and relative poverty?

Absolute poverty refers to those whose incomes fall below a line set by a given country. Below this line people are unable to meet their basic needs for food, water and shelter. They also have no access to social services such as health care, education and utilities.

Relative poverty refers to people whose total incomes are less than a certain percentage—typically 50%--of the country’s me.dian income. Because the median income can vary as a result of economic growth, the line for relative poverty can change. When poverty is defined to include access to services and security critical to well-being—and not just income and consumption—the global poverty rate increases by 50%.

Numerous young children hold up silver bowls to receive porridge at a child-friendly space in the Democratic Republic of Congo
Young children, including a family of six, in the Democratic Republic of Congo await a meal of porridge. Photo: Jon Warren

3. Is poverty only about money?

No. Common perceptions of poverty consider income and consumption alone. However, there are significant approaches that say other factors must be included. This is because money doesn’t tell the whole story. (Typically, when the poor describe their poverty they do so in ways that go beyond simply not having enough money.) Examples of such approaches include the Multidimensional Poverty Index (MPI) and the Human Development Index (HDI).

The MPI is supported by the United Nations Development Programme. It measures poverty across three dimensions—health, education and standard of living. It then further breaks these down into 10 indicators:
  • Nutrition
  • Child mortality
  • Years of schooling
  • School attendance
  • Cooking fuel
  • Sanitation
  • Drinking water
  • Electricity
  • Housing
  • Assets
For more information on the MPI, see the UN’s 2022 Multidimensional Poverty Index. World Vision’s range of programs actively address a number of these indicators.

Two women surrounded by damaged houses and debris.
The ongoing climate crisis is a direct threat to poverty reduction despite the poorest people in the world contributing the least to climate change. World Bank says up to 130 million people can be pushed to poverty in the next 10 years if climate change remains unchecked.

4. Which places around the world are most affected by poverty?

According to the World Poverty Clock, the global breakdown for the number of people living in “extreme poverty" per continent is:
  • 430.3 million in Africa
  • 120.3 million in Asia
  • 3.2 million in Europe
  • 12.4 million in North America
  • 29 million in South America
  • 3 million in Oceania

5. Which are the poorest countries in the world?

As of 2023, the three countries with the greatest number of people living in extreme poverty are:
  • Nigeria (71 million)
  • Democratic Republic of Congo (68 million)
  • India (44 million)
Villagers line up to fill their jerry cans with clean water.
Severe droughts drive water prices in Somalia upward, making it difficult for villagers to avail this basic commodity. World Vision helps provide emergency water trucking in some regions to give villagers access to clean water. Photo: Gwayi Patrick

6. How many children around the world live in poverty?

Nearly 719 million people around the world live in “extreme poverty” (less than US$2.15 per day). Children and youth account for two-thirds of the world's poor. It is estimated that 593 million children live in multidimensional poverty, which means that they lack basic necessities such as clean water or nutrition.

7. How does poverty affect children?

Children usually depend on their parents or guardians. They don’t have the resources to pull themselves out of poverty. This makes them more likely to experience the problems common to poverty, including:
  • Illness due to unsafe water and poor sanitation
  • Malnutrition (for example, leading to stunted growth)
  • Lack of access to education (for example, leading to depressed future productivity)
  • Inadequate health care
Child poverty has other negative effects. It can trigger a cycle of poverty that lasts generations, increase the incidence of early marriage and raise psychological issues of stress and shame. However, with the right response, starting with education, the cycle of poverty can be broken.

8. What can I do to reduce poverty?

You can find and support creditable organizations that are working to reduce poverty in the world’s poorest communities. There are a variety of organizations focused on different aspects of poverty. These can include access to health care and education services, labour rights and conditions, or by demographic such as women and children.

Supporting these organizations can involve everything from making financial donations, to volunteering, to advocacy work. With World Vision, there are several ways that you can get involved in the fight against poverty. You can donate through our Gift Catalogue, become a child ambassador, support a community and more. Explore!

A girl and a boy sitting on the ground, eating one pack each of ready-to-use therapeutic food.
Two small children diagnosed with severe malnutrition are consuming a pack each of ready-to-use therapeutic food. Photo: Suzy Sainovski

9. What is World Vision doing to combat poverty around the world?

World Vision Canada works with the world’s most vulnerable people regardless of religion, race, ethnicity or gender. We focus on children and their communities in more than 50 countries and use a variety of programs to:
  • Increase access to, and the quality of, education
  • Develop economic self-empowerment (raising the economic well-being of individual households and/or communities)
  • Increase access to health care
  • Improve access to water, sanitation and hygiene
  • Increase child protection (for example, preventing early marriage)
Three young Rohingyan children look into the camera at a World Vision Nutrition Centre located in a refugee camp
An effective way to reduce poverty is by strengthening the livelihoods and financial security of families. In Laos, rural families join a savings program allowing them access to basic financial services. Photo: Nicolas Charlassier, Simon Cote

10. Is child sponsorship an effective way to reduce poverty?

Of course, there is no magic wand to eliminate poverty. But with courageous effort, love and cooperation we can all make a difference.

Child sponsorship has been how World Vision donors make that difference by helping to strengthen communities. The results have been significant.

Through Area Development Programs, which last between 10-15 years, child sponsorship has enabled communities to make important progress. For example*:
  • In Chingeltei, Mongolia from 2013 to 2021, households with enough food year-round for their family needs increased from 52.6% to 74.4%, while parents and caregivers using effective disaster risk reduction strategies went up from 72.8% to 94.4%.
  • In Toroly, Mali between 2008 and 2021, household access to improved latrines increased from 8% to 74.6%.
  • In Eravur Pattu, Sri Lanka, children who can read with comprehension increased from 18% in 2014 to 65% in 2021.
Like what you see? Children in 44 countries around the world can use your help today and you can provide it when you sponsor a child.

We also work directly with children in conflict zones. These are places where children have been child soldiers, forced into early marriage or physically and sexually abused. For example:
  • In war-torn Afghanistan, World Vision has set up a network of community change groups that have helped children like Esin avoid being married off as young as 12. Read her story and others like it.
  • In South Sudan, now seven years into civil war, World Vision helped Agnes—a former child soldier forced to kill to survive. Agnes is being reintegrated into her community with psychological counseling and the opportunity for education. Read her story here.
  • In drought-stricken Somalia, a World Vision emergency mobile health unit helped save 2-year-old Amina’s life. Read her story here.

*World Vision Canada Annual Results Report, Fiscal Year 2021

Updated by Charizze Abulencia & Judy Daniel

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