The use of income as a measure of welfare is an age-old system; it is very easy and common to define welfare in relation to achievement in regards to basic human wants. Many human needs have been proposed as part of these basic needs, including food, housing, and clothing; although the range of proposed basic needs are not always in agreement, there is agreement that it is a good measure of human welfare. There is also an agreement that income growth is an important condition for reducing poverty, particularly in developing countries. Although, for some reasons of convenience, prejudice, or measurability, welfare measures mainly focus on income growth as a way of improving welfare, while ignoring nonincome aspects to some degree.

Household income is the collective ...