Theories of poverty

Theories of Poverty

Poverty is a condition in which an individual or community lacks a definite amount of resources or possessions, including material or monetary possessions. Specific situations called absolute or extreme poverty involve the complete absence of the means required to meet basic needs such as food, clothing, and shelter. Note that there are different definitions and qualifiers or measures of poverty that are dependent on context.

Nonetheless, there are several theories of poverty, each explaining the reasons why individuals or communities lack the capacity to meet and maintaining a minimum standard of living. These theories of the causes of poverty also provide different frameworks for developing and implementing poverty alleviation strategies.

The Two Major Schools of Thought of Poverty

There are two major theories or schools of thought explaining the causes of poverty: individualistic theories and structural theories. The individualistic perspective generally considers poverty as a condition resulting from the shortcomings of impoverished individuals while the structural perspective trace the roots of impoverished conditions from the deficiencies in social structures and systems.

1. Individualistic Theories of Poverty

There is a group of theories arguing that poverty results from the deficiencies of individuals or the shortcomings of poor people. These theories are collectively called the individualistic theories of poverty.

Eighteenth-century sociologist and biologist Herbert Spencer, in his book “Social Statics: Or The Conditions Essential to Human Happiness” first published in 1851, blamed poverty on the poor. He explained that poverty should be attributed to bad moral character. For him, poor people should not be allowed to eat because they are unwilling to pursue employment.

Under the individualistic theories are more specific theories of the causes of poverty. These theories include the biogenic theory of poverty and inequality, the human capital theory, and the cultural theory of poverty.

2. Structural Theories of Poverty

Structural functionalism is a framework in sociology used for developing theories based on the notion that the society is a complex system composed of different parts that collectively work together to promote solidarity and stability. It is a model for attempting to explain why a society or a certain element or situation in a society functions the way it does by focusing on the relationship between different social institutions.

As one of the theories of the causes of poverty, structural theory presents the concept of structural poverty. The theory argues that macro-level factors such as demographic vulnerabilities, labor market opportunities, and resource distribution can determine the susceptibility of individuals and communities to poverty. There are more specific theories under the structural perspective of poverty.

Individualistic Perspective vs Structural Perspective

The Individualistic Theories of Poverty

1. Biogenic Theory

The book “The Bell Curve: Intelligence and Class Structure in American Life” by psychologist Richard J. Herrnstein and political scientist Charles Murray provides the foundational contentions related to the biogenic theory of poverty and inequality.

Accordingly, the intelligence of an individual can better predict his or her financial income and job performance, among other personal dynamics. The primary force that creates and divides modern social classes is not family background but inherited cognitive ability. Hence, the upper class and the lower class represent a distinction between the class of intelligent people and the class of those who lack relevant intelligence levels.

Thus, the biogenetic theory of poverty and inequality argues that native intelligence, rather than social status, influence the life prospect of an individual. Nature essentially determines the socioeconomic status of an individual. People with a high level of intelligence are destined to become rich while those with a lower level of intelligence are naturally fated to become poor. Granted that all things are equal except for level of intelligence, this argument has been evident in inequalities in educational attainment, occupational performance, and other social outcomes.

2. Human Capital Theory

Human capital is the collection of competencies or skills and knowledge, as well as traits or personal attributes, behaviors, and habits embodied within an individual and needed to perform labor and produce economic value.

Scottish economist Adam Smith introduced the concept in the 18th century while American economists Gary Becker and Theodore Schultz first introduced its modern and more definite conceptualization during the 1960s and 1970s.

When considered as a theory for explaining the causes of poverty, human capital provides a model for illustrating the relationship between the decision of an individual to invest in education or training and the pattern of his or her lifetime earnings. The different levels of investment in human capital can also determine different levels of earnings.

The concept can also illustrate the relationship between age and earnings. Younger individuals are more likely to become poor because they have not yet accumulated enough human capital. However, older adults are also likely to become poor either because they are too late to acquire human capital or are not equipped with time-relevant set of competencies.

3. Cultural Theory

Similar to the biogenic theory, the cultural theory of poverty blames the prevalence of socioeconomic inequality not on the social structures or systems but on the deficiencies of impoverished individuals. If the biogenic theory specifically argues that poor people lack intelligence or cognitive ability, the cultural theory claims that they lack the motivation to achieve because of their negative values.

The theory has a close resemblance to the contentions of Spencer. However, it was expounded further by American anthropologist Oscar Lewis. It is also similar to the flawed character theory of poverty by economist Bradley R. Schiller. Nevertheless, the theory essentially explains that the values of an individual experiencing poverty play a critical role in perpetuating his or her impoverished condition. This assertion tries to explain why people in certain communities remain poor remains despite the existence of poverty alleviation programs.

An interesting aspect of the cultural theory of poverty is that it does not only affect a particular individual but also the generations preceding and succeeding him or her. In the book chapter “Culture of Poverty” published in 1969, Lewis explained that the subculture of the poor has mechanisms that perpetuate poverty. For example, children growing up in impoverished communities will internalize feelings of desperation or dependence, thus making them unable to capitalize on opportunities when they grow up.

Poverty is essentially a result of negative and counterproductive cultural values passed down through generations according to this theory. The reason why poverty endures is that it creates a cycle. Furthermore, this theory also contends that the affluent members of the community have cultures or values that are very different from their impoverished counterparts.

The Structural Theories of Poverty

1. General Structural Theories

In his book, political science professor David Brady argues that poverty is not simply a result of the inability of an individual. Poverty tends to be prevalent in vulnerable demographic environments and troubled labor market circumstances. Hence, the greater the number of people living under these circumstances, the higher the prevalence of poverty.

Brady specifically explains that poverty results from the failure of the society to collectively take responsibility for promoting the economic security of its citizens through the instrument of the welfare state. Hence, welfare programs are collectively the best tool for reducing poverty.

Sociology professor Edward Royce also argues that in the United States, despite being a rich country, poverty remains rampant not because of the individual failings of the poor but because of the failings of the American social system, especially of its political economy.

Royce specifically noted that poverty represents structural inequality. In societies with incidents of poverty, people have unequal status as demonstrated in unequal relations in roles, functions, decisions, rights, and opportunities.

2. Marxian Theory

The works of German economist and sociologist Karl Marx provided the fundamental basis for the body of ideas called Marxism. These ideas generally represent a criticism of capitalism, specifically arguing that inequality is a necessary component of a capitalistic economic system.

Note that the separate works of Brady and Royce also explained the role of inequality in perpetuating poverty. They each noted that modern social structures promote an imbalance of power and thus, promote inequality. Hence, Marxism is a specific theory within the general structural theory of poverty.

Of course, true to the assertions of classical Marxism, the Marxian theory asserts that the cause of poverty is intentional due to the class struggle between the capitalist or owners of the means of production and the laborers. Essentially, the capitalists intentionally exploit their laborers and try to prevent them from gaining socioeconomic advancements as much as possible to maintain their control over the means of production.

3. Restricted Opportunity Theory

The restricted opportunity theory explains that poverty results from the circumstances that are beyond the control of an impoverished individual. These circumstances generally center on the absence of opportunities or the lack of access to such opportunities.

Economist Bradley Schiller first introduced the restricted opportunity theory as one of the three theories of the causes of poverty—along with the flawed character theory and Big Brother theory—in the book “The Economics of Poverty and Discrimination” first published in 1972.

Central to the theory is an argument that poor people lack suitable and relatively abundant access to economic opportunities. They cannot avoid poverty or would not be able to get out of their impoverished conditions unless their economic opportunities improve.

Poverty is essentially the lack of opportunity. The restricted opportunity theory explains that opportunities such as access to high-quality education, effective and efficient health care programs, safe communities, and relevant public services and programs are factors that can determine the socioeconomic status of an individual


  • Becker, G. S. 1993 Human Capital: A Theoretical and Empirical Analysis, With Special Reference to Education. 3rd ed. Chicago: University of Chicago Press. ISBN: 978-0-226-04120-9
  • Brady, D. 2009. “Structural Theory and Poverty.” Rich Democracies, Poor People: How Politics Explain Poverty. Oxford: Oxford University Press. ISBN: 978-0-19-538587-8
  • Herrnstein, R. J. and Murray, C. 1994. The Bell Curve: Intelligence and Class Structure in American Life. New York: Free Press. ISBN: 0-02-914673-9
  • Lewis, O. 1969. “Culture of Poverty.” In D. P. Moynihan, On Understanding Poverty: Perspectives from the Social Sciences, New York: Basic Books
  • Royce, E. 2015. Poverty and Power: The Problem of Structural Inequality. 2nd ed. Lanham: Rowman & Littlefield. ISBN: 978-1-4422-3808-4
  • Schiller, B. 1972. The Economics of Poverty and Discrimination. 1st ed. New Jersey: Prentice-Halle
  • Schultz, T. W. 1961. “Investment in Human Capital.” The American Economic Review. 51(1): 1-17. JSTOR: 1818907
  • Spencer, H. 1851. Social Statics: Or The Conditions Essential to Human Happiness, and the First of them Developed. London: John Chapman