What is the cycle of poverty?

How Concern understands extreme poverty, and how that informs our work to end it.

At the beginning of 2020, just over 588 million people are living in extreme poverty, meaning that approximately 7.7% of the global population lives below the international poverty line of $1.90 per day. Put another way, 588 million people presently have a lack of basic assets and/or do not see a return on the assets they have. For most people, this forms a cycle of poverty that, without any outside intervention, they’re unlikely to break. They may have inherited this cycle from their parents, and are also likely to pass it on to their own children.

What does this mean for ending poverty? Here, we explain both what the cycle of poverty is and how we might end it, by looking at four types of poverty, the two factors that fuel poverty, and how we can address both to break the cycle.

Four charts illustrating four types of poverty

1. Occasionally Poor

Chart illustrating occasional povertyOccasional Poverty and Cyclical Poverty both represent transient poverty. People experiencing either of these types of poverty can expect to spend periods of time living above the poverty line. People experiencing Occasional Poverty are more likely to spend long stretches of time above the poverty line. However, an unexpected event, such as a fire or localized flooding, can leave these groups more vulnerable.



2. Cyclical Poor

Graph illustrating the curve of cyclical poverty

What if the shocks that trigger periods of poverty for the Occasionally Poor are less severe but more consistent? This is the situation faced by millions of families who rely on agriculture for both their food and their livelihoods around the world. During peak periods, such as harvests, there is usually guaranteed income, either from working on someone else’s farm or from selling what’s harvested at the local market. Even without droughts or floods, “hungry” seasons between harvests can happen every year, resulting in Cyclical Poverty.



3. Usually Poor

Sine curve graph charting the "Usually Poor" cycle of povertyThe Usually Poor can be seen as an inverse of the Occasionally Poor: Whereas the Occasionally Poor are generally out of poverty and only fall below the poverty line due to unanticipated shocks like conflict or climate emergencies, the Usually Poor are generally in poverty with the exception of an unanticipated windfall. This could be in the form of a good rain after a dry spell, or someone finding employment that pulls their family above the poverty line.



4. Always Poor

Sine curve graph charting the "Always Poor" cycle of povertyThose who are Always Poor, like the Usually Poor, tend to be those who are poor over long periods of time — in many cases, over generations. Families who are Usually Poor may either benefit from a good harvest or a rare period of high-income labor. However, the Always Poor live consistently below the poverty line, even if there’s some fluctuation in their income following harvests or work opportunities.



What drives poverty

As noted above, while the different types of poverty are centered on lack of assets or lack of a return on those assets, they also suggest different causes and maintainers of poverty. The obstacles that keep a community in Lebanon in extreme poverty may be totally different than those keeping a community in Malawi in extreme poverty. That said, we can boil all of this down into two key dimensions that, when combined, equal poverty: marginalization and risk.

Poverty = Inequality x Risk

Inequality 

By inequality, we mean the systemic barriers that lead to groups of people without representation in their communities. In order for a community or country to work its way out of poverty, all groups must be involved in the decision-making process — especially when it comes to having a say in the things that determine your place in society.



All types of systemic barriers (including physical ability, religion, race, and caste) serve as compound interest against a marginalization that already accrues most for those living in extreme poverty.

Risk

Risk is the combination of a group’s level of vulnerability and the hazards they face. The more vulnerable a group is — and the more hazards they face — the harder it is to break the cycle of poverty. As noted above, risk often takes the form of emergencies: natural disasters, outbreaks of disease, and conflict all hit more vulnerable groups harder.



How do we break the cycle of poverty? 

Sine curve graph charting the "Never Poor" cycle of financial stability

While each situation is different, Concern’s approach to breaking the cycle of poverty is focused on addressing marginalization and risk. Looking at the waves that represent each type of poverty, our goal is to design interventions and programs that straighten each of the waves out, and move the overall line above the poverty line.

Addressing Inequality

It stands to reason that, if there’s no one-size-fits-all approach to poverty, there’s also no one-size-fits-all approach to ending it. To address inequality, we consider the different starting points within communities, acknowledging the different skills and means that people already have and addressing the different barriers that people may face. Our approach to building equity is rooted in the knowledge that it’s not enough to focus on giving everyone the same resources to succeed. We have to focus on helping everyone achieve the same results. 



For instance, one of the reasons that our work focuses on women and children is that gender inequality remains the most pervasive inequality (and one that intersects with other forms of inequality based on age, ethnicity, race, disability, caste, religion, sexual orientation, or geographical location).

In the countries we work, we prioritize understanding the ways that gender disparity presents at the national and local level, and how those  inequities affect participation in our programs. We then look for ways to bring women not only into our programs, but also into our staff and leadership in each country. With younger generations, we work to address gender imbalances and gender-based violence in the education system. With adults, we build support groups for both genders — ensuring that we’re not only fixing the symptoms, but addressing the causes to develop lasting equity.

The more we can reduce inequality, the more we can work with communities to consistently earn more and stay above the international poverty line.

Addressing Risk

The other lever we can turn in order to break the cycle of poverty is offsetting risk. The more a community is better prepared against hazards, and the more resilient it is against vulnerability, the less prone they are to risk. This also requires a tailored approach given that each situation is unique. 

All Concern programs incorporate some degree of disaster risk reduction as we work to offset the potential damage or harm caused by events ranging from climate disasters to conflict. Understanding how each individual hazard may affect a community, along with how they work together, is essential to having an effective response to risk. By focusing on specific vulnerabilities in specific situations, we can plan in advance to offset both catastrophic and everyday risks, creating a more stable and consistent quality of life for the people we serve.



Who Concern works with (and why)

At Concern, our belief is that we must target our work so that it benefits primarily those living in extreme poverty. This means that we don’t always specifically target extremely poor people, but the extreme poor must be the ones who ultimately benefit from our work.

While we primarily work with the Always, Usually, and Cyclical Poor, we will also work with the Occasionally Poor when we believe that work will benefit those living in extreme poverty. This is especially true in times of natural and man-made disaster, such as the 2015 Nepal Earthquake, the ongoing Syrian conflict, or the current COVID-19 pandemic

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