ECON 2010 e.

Portfolio Instructions:
Read the article below, and write a 3-4 page reflective paper re: Global Poverty. State some suggestions you
feel could be implemented that either could slow down or possibly alleviate the world poverty problem.
Upload your paper on Connect on the ePortfolio assignment.
Global Poverty
Last month the U.S. Census Bureau announced that 37 million Americans are poor. This is shocking news to
the rest of the world, especially the 2.5 billion residents of low-income nations around the world. With
average incomes (per capita GDP) of less than $2,500 per year, they imagine that, with GDP per capita over
$40,000, everyone in America must be rich.
They may have a point. By global standards, poor Americans look very prosperous. Even the poorest
Americans have roofs over their heads, plenty to eat, indoor toilets, safe water, a car, and access to schools,
hospitals and entertainment. Four out of ten poor Americans even own their own home! How could anyone
with so much, the rest of the world wonders, consider themselves poor?
Relative Standards - Truth be told, poverty standards are culturally bound. The poverty thresholds established
in the United States and elsewhere reflect national judgments about what constitutes minimum acceptable
living standards.
Perspectives on poverty thresholds are strongly influenced by prevailing income levels. Just as the United
States sets a very high threshold for poverty, poor nations like Burundi, Ethiopia, Paraguay, and Bangladesh
set the minimum standard of living so low that few Americans could comprehend them. In the poorest
countries a diet of starchy staples, a few beans, and maybe a few vegetables might seem minimally adequate.
In richer countries, people will expect more variety, higher quality, and more produce in a minimally adequate
diet.
Scientific judgments about minimal caloric intake dont define poverty diets; rather, cultural norms play a
critical role in defining what is adequate and what is not.
U.S. Poverty Thresholds - In the context of U.S. affluence, the official poverty threshold is roughly $20,000 per
year for a family of four. At first glance, that might look like a lot of money. But the average U.S. family has an
income of over $70,000 per year. So on a relative scale, poor families in America have a standard of living far
below the norm. Breaking that income down, the Census Bureau figures a poor family of four has about $20 a
day to spend on food and another $40 a day for rent, transportation, education, recreation, and everything
else.
In real (inflation-adjusted) terms, this was about how much the average American family had to spend in the
1950s. Opinion polls reveal that Americans today think that is far too little income just to get by. Hence, we
call such families poor.
World Bank Thresholds - The rest of the world would draw no such conclusion. Only half of the nations in the
world have per capita incomes above $5,000 (the one-person U.S. poverty equivalent). Sixty nations have per
capita incomes below $2,000 per person. Accordingly, if official U.S. poverty standards were applied to other
nations, most of the worlds inhabitants would be classified as poor.
To make finer distinctions among the haves and have-nots, the World Bank in 1985 established uniform
global standards of poverty. And the Bank set the bar amazingly low. In fact, the World Bank regularly uses
two thresholds, namely $1 per day for extreme poverty and a higher $2 per day standard for less severe
poverty. Like the U.S. poverty lines, the Banks global poverty lines are adjusted each year for inflation. They

are also recalculated on occasion (e.g. 1993) to reflect changing consumption patterns. In todays dollars, the
$1 standard of 1985 is actually about $1.50 per day in U.S. currency.
Nevertheless, the World Bank standard is still referred to as the dollar-a-day index of extreme poverty. The
World Bank thresholds are incomprehensibly low by American standards. How much could you buy for $1.50 a
day? A little rice, maybe, and perhaps some milk? Certainly not a Big Mac. And part of that $1.50 has to go for
rent. Clearly, this isnt going to work.
A $1.50 per day per person adds up to $2,190 a year for a family of four about 1/10 of the official U.S.
poverty threshold. Doubling the Bank standard to $2 per day doesnt reach a whole lot further.
The World Bank, of course, wasnt defining poverty in the context of American affluence. They were instead
trying to define a rock-bottom threshold of absolute poverty a threshold of physical deprivation that
everyone would acknowledge as the barest minimum a condition of unacceptable deprivation.
Global Poverty Counts - So who actually gets by with so little income? According to the World Bank, billions of
people do. The latest household surveys reveal that over a billion are in extreme poverty ($1/day) and
nearly three billion people as being simply poor ($2/day).
The accompanying figure shows where concentrations of extreme poverty are the greatest. Concentrations of
extreme poverty are alarmingly high in dozens of smaller, less developed nations like Mali, Haiti, and Zambia,
where average incomes are also quite low.
However, the greatest numbers of extremely poor people reside in the worlds largest countries. China and
India alone contain a third of the worlds population and over half of the worlds extreme poverty.

Country
Mali
Nigeria
Haiti
Zambia
Madagascar
Bangladesh
India
El Salvador
China
The World

% Of Population In
Extreme Poverty
71%
70%
67%
64%
61%
36%
35%
31%
17%
21%

Number Of People In
Extreme Poverty
(Millions)
9
98
6
7
10
50
37
2
221
1,080

Social Indicators - These levels of poverty imply levels of physical and social deprivation few Americans can
comprehend. Living on a dollar or two a day means always being hungry, malnourished, ill-clothed, dirty, and
unhealthy. The problems associated with poverty begin at birth. In low-income countries only 1/3 of all births
are attended by a skilled health practitioner. If something goes awry, both the mother and the baby are at
fatal risk. Nearly all of the children in global poverty are in a state of chronic malnutrition. At least one out of
ten children in low-income nations will actually die before reaching age five.
In the poorest sectors of the population infant and child mortality rates are often two to three times higher
than that. This contributes to frighteningly low life expectancies. While life expectancies at birth are 75-80

years in developed nations like the U.S., Europe, and Japan, life expectancy is only 40-50 years among the
globally poor.
Fewer than one out of two children from extremely poor households are likely to stay in school past the eighth
grade. Illiteracy is rampant, and access to health care, secondary education or even telephones is more
exception than the rule.
The Millennium Goal - In view of this global deprivation, the United Nations set goals for economic progress
back in 2000. The very first Millennium goal is to cut in half by 2015 the proportion of people living on less
than $1 a day in 1990. To date, only modest progress has been made toward this goal largely due to the
phenomenal economic growth in China. To even come close to the Millennium Goal by 2015 will require more
sustained economic growth in the poor nations than they have yet achieved.