Question

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

Answer 1

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.