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The Costs of Poverty
When discussing poverty, it can sometimes be easy to get caught up in the numbers—of people living in poverty, of incomes, and of poverty lines. However, it is important to keep in mind that the numbers translate into real people with real suffering. The costs of poverty are widespread and they affect almost every area of life. While the poor definitely suffer from the negative effects of poverty, it is also true that poverty costs society as a whole.

Poverty affects many different areas of life. Research has consistently shown that the poor fare worse than the non-poor on virtually every quality of life indicator. Imagine for a minute that you are poor and what consequences this would have for your life. Studies indicate that you would be twice as likely to be evicted from your home than someone who is not poor, eight times more likely to have your utilities (electric and gas) turned off, three times as likely to fear going out at night, three times as likely to live somewhere infested with rats and mice, and five times more likely to have your phone turned off. If you became sick, you would be twice as likely not to seek medical care for your illness as someone who is not poor. In addition to this, you would be looked down on by the rest of society and be called lazy, immoral, and dirty. You would be looked at by many as a reject.

In addition to the financial and physical suffering that the poor endure, there are also psychological effects as well. Poor individuals often feel like they have little power over their lives or society. They cannot afford to hire lawyers, go on strike for higher wages, or fight against poor housing conditions. The poor often pay higher interest rates and they are often the first to be fired from jobs. In many cases, the poor see examples of wealth all around them, but no matter how hard they try to share in the wealth, they are unable to get ahead.

dry irrigationGlobally, the problems of poverty in developed countries like the United States and Canada are multiplied in developing countries. Over 1 billion people in developing countries do not have adequate access to water. About twenty-five percent of people in the world live without access to electricity. Over twenty-five percent of the world’s wealth is held by less than one percent of the population. While over 780 billion dollars is allocated for military spending, only 6 billion dollars is spent globally on basic education and only 9 billion for clean water and sanitation. In fact, more money is spent on cosmetics in the United States alone (8 billion) than the entire world spends on basic education.

Those most affected by poverty are children. Globally, almost one in two children or half of the children in the world live in poverty. Poor children are much more likely than other children to suffer from problems like iron deficiencies, stunted growth, physical or mental disabilities, and fatal accidents. They have IQ scores that average 9 points lower than children who are not poor and they are more likely to drop out school. Poor children are also four times as likely to die in a fire and five times more likely to die from an infectious illness than children who are not poor. Poor children are up to three times more likely than non-poor children to die in childhood. UNICF estimates that each day up to 30,000 children die due to poverty. In the ten seconds that it took you to begin to read this unit, three children died from the effects of poverty and malnutrition.

For the most part, those who are not poor are shielded from the direct effects of poverty. For many people, the effects of poverty are only witnessed as they walk by a homeless person on the street or see pictures of poverty on the news. Yet, while those who are not poor do not generally experience the direct effects, they do experience indirect effects from poverty whether they know it or not. In addition to greater costs to the government, poverty costs society through fewer educated citizens, less social/political participation, and more neighborhoods and areas that are high in danger and crime. The Children’s Defense Fund sums up the effects of child poverty:

Every year of child poverty at current levels will cost the economy between $36 billion and $177 billion in lower future productivity and employment among those who grow up poor. These costs, moreover, do not include the billions of additional dollars that will be spent on special education, crime, foster care, and teenage childbearing resulting from child poverty.
In other words, poverty has effects both on poor individuals, and also on the wider society. These negative effects produce costs that are both financial and humanitarian.

The Causes of Poverty

What causes poverty? Why is it present in society? There are a variety of possible answers to these questions. Let’s look at some of the possible answers that society and social scientists have given as to what causes poverty and why it still exists in society.

Personal and Cultural Inferiority

One of the most common explanations for poverty is that poor people are poor because they are somehow inferior to others or do not work hard enough. You have probably heard some of these explanations in the media or in peoples’ conversations. These explanations are often that poor people are lazy, dumb, not motivated, drug users, or are abusing the welfare system. The idea behind this explanation is often a social extension of the “survival of the fittest.” In other words, poor people lack the innate talent and motivation to get themselves out of poverty. Deficiency theory says that the poor have an innate inferiority and that is the reason they are poor. One theorist suggested that the poor were intellectually inferior or not as smart as other people in society and that this was passed from parents to their children.

Another variation on the inferiority explanation is the argument that the poor have different goals, beliefs, and values, which prevent them from getting out of poverty. This is known as the culture of poverty theory and it argues that the poor group’s culture is deficient in some way. One theorist argued that the poor were present-oriented or living from moment to moment while the non-poor were future-oriented or living with long-term goals in mind.

Both personal and cultural inferiority explanations have been widely criticized and evidence has not backed up these arguments. These types of person blame approaches to poverty also obscure the picture of poverty and influence possible solutions. With both of these explanations, the implication is that nothing can be done to solve poverty because the poor can’t be helped. Despite a lack of evidence for the explanations, they continue to receive attention in the media. Many individuals believe that the poor are responsible for their own fate and do not deserve to be helped by assistance or changes to society.

Institutional Discrimination

poor father and childOther theories suggest that poverty is better explained by looking at the structure of society and the ways that society works. Institutional discrimination is when the accepted ways of doing things and the structure of society disadvantage the poor. There are many ways that the poor get “trapped” in poverty through institutional discrimination. For example, most good jobs today require a college education. However, the poor often do not have the money to attend college or to send their children to college. Scholarships and other types of aid are limited and they often go to the better students. Children who grow up in poverty often attend under-funded schools and they are more likely to be labeled as slow learners, which lowers expectations. This creates an expectation that the poor will not do well in school. A self-fulfilling prophecy is a prediction, often false, that then becomes true because the individual believed the prediction. In other words, children who are labeled as slow or troublemakers will often live up (or down) to that expectation.

Another example of institutional discrimination can be seen in the issue of illness. Individuals in poverty tend to get sick more than those who do not live in poverty. One of the reasons for this is that most poor individuals cannot afford health insurance or otherwise pay for preventative care, nutritious diets, or good medical care when they do get sick. When poor individuals get sick, they may get fired from their jobs or not receive money for the days missed (i.e., not being given paid sick days or have paid vacation days). Losing a job or not receiving a paycheck means that the poor have even less money for their health. These types of cycles often create situations where individuals are caught in a cycle of poverty, unable to make progress out of poverty because of the structural and institutional challenges they face.

The Political Economy

The political economy can be thought of as the intersection of politics and laws with the economy. Many countries today rely on a system of capitalism, where wealth and property are privately held and profit is the goal rather than providing for collective needs. Capitalism promotes poverty in a couple of different ways. First, owners and companies want to maximize their profits and one way of doing so is to keep labor costs down. Paying workers as little as possible means that they get a smaller share of the overall profits while those in power get the biggest shares.

Capitalism also promotes poverty because having a surplus of workers provides people who are willing to work for low wages. In other words, having more workers than you do jobs creates competition between the workers and enables companies to pay less but still have people who are willing to work because they need the job.


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What Can Be Done?
Not surprisingly, a number of solutions and ways to decrease poverty have been suggested throughout the years. These suggestions range from helping individuals in poverty to redistributing wealth in society so that everyone is more equal. Other suggestions have recognized the links between poverty and other areas of life, such as childcare, the economy, and education. In this section, we will discuss a few of the suggestions that have been offered.

The “Trickle Down” Approach

The United States has tried a “trickle down” approach at various points in an attempt to curb poverty and economic issues. A trickle down approach gives tax cuts and other benefits to big business and rich individuals under the theory that this will indirectly bring up the rest of the population. Some have suggested that by providing incentives to businesses to grow and expand, more jobs will be created for lower income individuals, bringing them out of poverty. The idea is that the benefits will trickle down from the rich to the poor, like a waterfall, creating a situation where everyone is floating on the pool created by the water.

Critics of the trickle down approach say that these measures only serve to create more wealth for the rich and that they do little to improve the situation of those living in poverty. Trickle down policies in the 1980s in the United States had several negative effects on the population as a whole. The federal deficit grew at the same time that the gap between the rich and the poor grew. Rather than boosting the poor up from poverty levels, the number of people in poverty increased.

The “Robin Hood” Approach

The “Robin Hood” approach to poverty seeks to redistribute wealth. The redistribution of wealth involves creating greater equality in opportunities and access to resources. A full redistribution of wealth would involve seizing fortunes and having the government take control of corporations in order to spread out the wealth and resources across the population. Not surprisingly, this is not a popular option in places like the United States where society is built on a free market and competition. However, other areas of the world, including many Scandinavian countries focus on trying to provide equality of wealth and opportunity, with strict tax laws and fewer loopholes for wealthier people to use.

work for food sign
The Interventionist Approach

Another approach to poverty is the interventionist approach, which argues that broad federal actions are the only way to decrease poverty. This approach generally suggests a number of ideas in different areas of life to help poor individuals. The common theme of the approach is that all of the actions involve the government in some form. Traditionally, this approach has advocated for things like job training, welfare benefits, and education for poor individuals in order to give them more marketable skills and to help them get jobs.

Many proposals have been made for decreasing or ending poverty in North America. The poor who are able to work need guaranteed jobs, training, and a minimum income that provides for their basic needs. To do so, the minimum wage needs to become a living wage. Poor parents need to have affordable childcare or government provided aid for childcare as well as guaranteed health insurance for the family. In addition, poor children need educational programs that will help them overcome the disadvantages that they face. Programs like Head Start have been helpful for many children and their effectiveness has been shown in a number of studies. Some have suggested creating a program similar to the GI bill, but for poor individuals as well. Whatever the program, most social scientists agree that it will take universal programs at the national level to combat poverty in developed nations like Canada and the United States.