Stuck in the Trap: Understanding Poverty and Inequality
- Favour Ogbadu
- Sep 5
- 8 min read
Updated: Sep 24
In the Netflix summer blockbuster ‘Straw’, Taraji P. Henson’s character drops a heavy truth, “people don't know how expensive it is to be poor.” Beyond the movie’s mixed reviews, her character’s words are a powerful and accurate description of the hidden costs of poverty and how inequality makes escaping it nearly impossible.
Poverty vs. Inequality: Different Sides of the Same Coin?
Poverty and inequality often get mentioned in the same breath, and in some cases interchangeably. But they are not the same thing. They are not the same player but team mates on the same team fighting against development.
Poverty is a universal language. Not everybody speaks it, but everyone certainly knows it. Yet, an important question remains: is there a standard definition that applies everywhere?
Poverty has been given a simple definition, 'a state where one lacks access to basic needs such as food, clothing, and shelter.’ Sounds straightforward, right? But, this is just a simple explanation for a deeply complex problem. The World Bank extends this definition with the concept of the ‘poverty line’, which it recently updated in June 2025 from $2.15 to $3 per person per day. The poverty line is calculated by comparing data across countries in purchasing power parity (PPP) terms. PPP is a ‘tool used to make multilateral comparisons between the national incomes and living standards of different countries.’
Inequality on the other hand, is multi-dimensional like poverty, but is most commonly understood in income terms. It looks at the disparity between what different people earn. One of the main ways income inequality is measured is with the Gini Coefficient which places countries on a scale from 0 to 1 (0% - 100%). A score of 0 represents perfect equality (where every person within an economy earns the same amount) while a score of 1 represents perfect inequality (where only one person has all the income and the rest have nothing). Both ends are extremes and no country falls on either side. Rather, most countries sit somewhere in the middle of the Coefficient.
Poverty and inequality often get mentioned in the same breath, and in some cases interchangeably. But they are not the same thing. They are not the same player but team mates on the same team fighting against development.
The bottom line? Poverty and inequality are not the same thing. Poverty is a pronounced deprivation in well-being while inequality refers to disparities and discrepancies in many areas. In essence, inequality is a broader concept that covers the full distribution of wellbeing whereas poverty focuses on the lower end of the distribution only and those who fall below a poverty line.
Why Do Poverty and Inequality Exist?
There isn’t one answer to this. Poverty usually comes from a combination of many factors.
Economist, Professor Christopher A. Sarlo breaks it down into three broad categories:
Luck: Some people are born in conflict-torn environments. Others survive extreme weather events like floods, droughts, or earthquakes. Many live under oppressive autocracies where choice is severely limited or even non-existent. In all of these cases, poverty occurs because of external events or the consequence of other people’s actions (such as government policies).
Choices: Here, ‘choice’ refers to the actions or inactions of a person rather than that of an external observer. In stable economies and democratic governments, people with limited education, unstable jobs, or those who have children early without a ‘proper family structure’ often fall into poverty. Sarlo argues that in countries like the United States of America, a developed nation, if people avoided these three ‘risks’ their chances of falling into poverty are less than 3%. But this is debated, and rightly so, because ‘choice’ is often shaped by deeper inequalities.
Enablement: Where there are working systems and mechanisms such as healthcare, and quality education, people are protected. Where there are weak systems and mechanisms, people fall into life long poverty. When systems and mechanisms are strong, they reduce or eliminate the consequences of ‘bad choices’ thereby making them less likely to fall into poverty.
Other researchers, like Professor D. O. Ajakaiye and Dr. V. A. Adeyeye describe two main types of poverty; structural (chronic) or transient (transitional) poverty.
Structural/Chronic Poverty: This includes persistent and sometimes permanent socio-economic deprivations. Structural poverty is linked to limited productive resources, lack of employable skills, systemic discrimination and gender barriers. Escaping this kind of poverty is very difficult. For instance, many Nigerians, despite their hard work, do not make enough wages to be lifted out of poverty.
Transient/Transitional Poverty: This is also known as temporary poverty and is caused by natural and man-made disasters. It is more reversible but if it lasts too long, it can become structural. An example is a university student who may experience poverty as they move from being under guardianship to managing their own resources, but in most instances, they are able to escape poverty.
This is where poverty traps come in. Poverty traps are societal and economic conditions where people struggle to escape financial insecurity, no matter how hard they try.
And what about inequality?
In the same vein, inequality has multiple drivers including where you are born and where you live, your country’s economic development, the quality of your education and the socio-political stability of your country.
Imagine two young people; one born in a country with a stable government, excellent schools, and a thriving economy, and another born in a country struggling with political instability, poor education, and limited jobs. Even if both work just as hard, with the same number of hours, the first has a huge head start. That's inequality in action.
The Vicious Cycle: How Poverty and Inequality Feed Each Other
Poverty and Inequality do not just exist side by side; they fuel each other.
Those born poor, with fewer resources and opportunities, often have to prioritize immediate survival instead of pursuing education, entrepreneurship, or long-term career opportunities.
Extensive poverty also leads to low savings rates. Without external sources of finance, investment rates stay low. Low investment results in slow economic growth, which is, in turn, insufficient to make a dent in poverty.
In developing countries, where government investments are often weak, inequality exacerbates the problem of creating and maintaining accountable systems. This increases the probability of adopting economic and social policies that inhibit growth and poverty reduction.
The result? A vicious circle where both poverty and inequality reinforce one another, creating the poverty trap.
Imagine two young people; one born in a country with a stable government, excellent schools, and a thriving economy, and another born in a country struggling with political instability, poor education, and limited jobs. Even if both work just as hard, with the same number of hours, the first has a huge head start. That's inequality in action.
Is There a Way Out?
Many of the solutions required to reverse the global trend of poverty and inequality lie in the hands of political leaders. These include implementing solid macroeconomics principles that drive economic growth, strengthening education and health systems, and having social protection programs that support the most vulnerable.
But that doesn’t mean ordinary individuals, especially young people like you and me, have no role to play.
Policies: Policies shape the socio-economic terrain of every nation. Youth can play a role by researching and understanding the policies that can drive change in their nations. This evidence-based knowledge will empower them to advocate for better policies by engaging policymakers and even becoming policymakers themselves.
Entrepreneurship: Entrepreneurship provides jobs and raises income for people leading to economic growth. Young people can not only build their own skills in order to start entrepreneurial ventures, they can also help others upskill which will allow them access better opportunities and reduce inequalities.
Education: Education has the power to close the inequality gap. Youth should invest in their education and also encourage education within their spheres. For example, Aramide Kayode founded Talent Mine Academy, a free school in Nigeria providing education to low income children.
Photo Credit: Talent Mine Academy
Many of the solutions required to reverse the global trend of poverty and inequality lie in the hands of political leaders...But that doesn’t mean ordinary individuals, especially young people like you and me, have no role to play.
The Bigger Picture
Poverty and inequality are not new concepts and many people have been caught in the trap. But these challenges do have solutions, and history proves that the trap can indeed be broken.
Change does not always start global, it starts local, small. You might not be able to help everyone but you can help one person.
Taraji P. Henson’s character in Straw was right; ‘people don’t know how expensive it is to be poor.’ The first step is knowledge, and that’s what this article and other resources are for. You’ve got that now. The next step? Action.
So, as a young person reading this, what are you going to do about it?
DO MORE
Read More: Research more about poverty and inequality to better understand the root causes and evidence-based solutions. A great start is the Read More section just below!
Shape Policy: Use what you learn to advocate for stronger policies in your country, and consider stepping into policymaking yourself!
Build + Support: Support innovation and entrepreneurship and where possible, become an entrepreneur yourself.
Keep Learning: Education is a power tool and leveler and it does not only happen formally. Invest in your education and encourage education for others as well.
Give Back: Aid is a temporary solution but it is a necessary one. Many will not be able to escape the poverty trap on their own. Consider donating to or supporting initiatives and programs that help people escape poverty traps.
READ MORE
Read about the World Bank: June 2025 Update to Global Poverty Lines
Check out this article by the IMF answering the question What is Inequality?
Check out The Gini Coefficient Explained
Read more about how poverty and inequality are measured and analyzed
Read more about The Poverty Trap and why people stay poor
Learn more about Income Inequality and the Condition of Chronic Poverty
Check out this research paper on Concepts, Measurement and Causes of Poverty
Explore Sarlo’s paper on The Causes of Poverty
Watch this video on The Gini Coefficient Explained in One Minute
WRITTEN BY Favour Ogbadu.
Favour Ogbadu is an international development professional and lawyer, qualified to practice in Nigeria. She leverages her expertise in communication to craft compelling narratives and drive meaningful change. As a passionate advocate for social impact, she is driven by a desire to leverage her skills to create meaningful, sustainable change globally.
Want to connect with Favour? Connect with her on LinkedIn.
EDITED BY 'Zulu Uwolloh.
Zulu is a writer, self-proclaimed bibliophile, lawyer, and international development professional passionate about social impact and showing people how they can create change in their communities. She is also the founder of Kurerie, a digital platform, and community that amplifies the voices of youth making an impact in their communities. Kurerie educates young people on how they can become active stakeholders in the achievement of the SDGs. She is passionate about showing young people that they can change the world with the smallest actions.
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