It is believed by social scientists that income is not a complete indicator of development. In fact, income measurements like the GDP or GNP of a country only indicate the total wealth or output in an economy. These measurements do not tell us'how this output or wealth is distributed among the population. Similarly, per capita income tells us about the average income per person in a country and does not indicate the distribution of the income across the population. Therefore, GNP or the per capita income measurements do not inform us about expenditure and consumption level of each person in the country. The quality of life lived by people thus is not reflected accurately by the income indicator, more so when cross country comparisons are based on the levels of income. At best we can draw inferences based on averages and general view of income levels. It has been observed that a growing per capita GNP could be consistent with stagnant per capita personal income if the policies pursued for growth lead to the development of pockets of advanced sectors of modem technology. This is evident in a large number of developing countries where income inequalities have grown with the development of the modem sectors.
A number of attempts have however been made to make income a representative indicator of the well being by including other measures like the per capita personal income which is considered a preferable aggregate income indicator. This measurement also cannot be accurate as long as the spread of the per capita is not included in the data set.
The basic needs concept of poverty attempts to address some of the limitations of the income indicator by distinguishing between private income, publicly provided services and different forms of non-monetary income. The basic needs approach is based on access to such necessities as food, shelter, schooling, health services, potable water and sanitation facilities, employment opportunities, and opportunities for community participation. Basic needs indicators add a wide range of dimensions to income measures. The advantage of the basic needs approach over the income approach is that they measure goods and services directly in terms of human welfare.
For example, a rise in housing or essential transport costs would be counted as a decline in well being using basic needs indicators, while per capita GNP would record this as an increase (see McKinley for detailed discussion on this). It is suggested by scholars that indicators like access to productive assets (i.e., land, capital); access to social and physical infrastructure; access to housing and other consumer durables; and access to common property (i.e., certain aspects of the natural environment) could give a broader picture of the economic status of a country.