Question

Mention any two limitations of people per caption income

Answer 1

1. Per capita income does not reflect the standard of living of the people. Per capita income is an average and this average may not represent the standard of living of the people, if the increased national income goes to the few rich instead of giving to the many poor. Thus unless national income is evenly distributed, per capita income cannot serve as a satisfactory indicator of development.
 2. If per capita income is the measurement, the population problem may becancealed, since population has already been divided out. The field of enquiry is then unduly narrowed. As Kuznets warns, the choice of per capita, per unit or any similar measure to gauge the rate of economic development carries with it the danger of neglecting the denominator of the ratio.

Answer 2

Following are the limitations of per- capita income:

1. The per capita income does not tell us anything about the distribution of income. For instance,  a rich nation with an unequal distribution of income would be much lower than a weak nation with a more equitable distribution of income.  

2. The per capita income does not evolve numerous amenities & assistance that affect the quality of life, for example, education facilities, health facilities, etc.

3. The size of population influence the per capita income. Likewise, a large national income, per capita income would be low if a nation has a huge population.