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Question

Why do we use averages? Are there any limitations to their use? Illustrate with your own examples related to development.


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Solution

This answer will help in understanding the importance of averages while comparing development of two different nations.

  • One of the most important attributes for comparing different countries is their income.
  • Total income is not a useful measure for comparison between countries.
  • The income of all the residents of a nation is the total income of the nation.
  • Average income is the total income of the nation divided by its total population. Hence, the right measure used in comparing different nations is comparison of average incomes of nations.
  • Comparing total income will not help in estimating what an average person is likely to earn, since countries have different populations.
  • Per capita income is nothing but the average income.

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