Spring 2013

One-third of the world’s poor weren’t born poor; they fell into it

– The Wilson Quarterly

One effective way to fight poverty: prevent people from falling into it.

“Spectacular” is not too strong a word to describe the reduction in poverty around the world during the past quarter-century. Between 1981 and 2005, world gross domestic product quadrupled. The percentage of the global population living on less than $1.25 fell by half.

That reduction resulted mostly from people being lifted out of poverty, and in the popular mind, that’s where the story ends. But it doesn’t. One-third of the world’s poor were not born in poverty. They fell into it.

New policies need to be preventive — focused on stemming the flow of people into the ranks of the newly poor, argues Anirudh Krishna, a public policy professor at Duke, in Current History. He and several colleagues surveyed more than 35,000 households in Uganda, Kenya, Peru, India, and the United States over a nine-year period (2001–10). Poverty, they found, is sticky. Sixty percent of those who had fallen into poverty 15 or more years before they were surveyed were still poor.

Krishna and his colleagues isolated one reason: the cost of medical care. In the Indian state of Gujarat, 88 percent of the households that slipped into poverty attributed their plight to health care costs. A Peruvian man told of losing his wife to uterine cancer: “I was obliged to sell my animals, cows, oxen, and donkeys, and I also went into debt in order to care for her, and later, to bury her.” It’s not just the developing world: Medical expenses are to blame for more than half of all personal bankruptcies in the United States.

Those who have made only “marginal escapes” from poverty are especially worth targeting. The near poor — maids and pushcart vendors, for example — may have a steady income, but it depends on showing up to work every day. Up to one-fifth of family income can be lost during a major illness. Living on $1.27 a day suddenly becomes living on barely more than a dollar a day.

Affordable and accessible health care is key to future poverty reduction, Krishna argues. Japan, an early postwar adopter of universal health care, has just a two percent poverty rate. Sweden and other robust welfare states yield similar lessons.

By comparison, more than 30 percent of the population of Gujarat lives in poverty. Medical care is more expensive and less efficient there than in poorer parts of India. At the same time, the state’s booming economic growth has undermined the traditional social safety nets of family and community. When people get sick and fall into poverty, there is no one there to catch them.

Rapid economic growth is essential to the reduction of poverty, as are improvements in education and other targeted efforts to promote upward mobility, Krishna concludes, adding that poverty prevention should be the next big issue taken up by the world’s policymakers.

THE SOURCE: “The Mixed News on Poverty” by Anirudh Krishna. Current History, Jan. 2013.

Photo courtesy of Flickr/Dirk Guinan