Question

why do we use average income to compare the development of a country

Answer 1

Average income is used to compare development levels of a country for the following reasons:

1.Average income represents the total income of a country keeping in view of the total population.

2.If the average income is adequate to meet, the basic requirement and other facilities that country is considered developed.

3.More income means more of all things that human beings need. What ever people like and should have, they will be able to get with greater income.

Answer 2

We use averages because they are useful for comparing differing quantities of the same category.

For example, to compute the per capita income of a country, averages have to be used because there are differences in the incomes of diverse people. However, there are limitations to the use of averages. This does not show the distribution of thing between people. For an example, suppose in a country, the annual income of a rickshaw puller is Rs 8,000 while an MNC employee earns an annual package of Rs 12,00,000. The average income of this country, therefore, will be Rs 6,05,000. Here actual income or status remains unknown. One can clearly consider this as a rich country thereby ignoring the income disparity between two individuals. Averages are useful for comparison, they also hide disparities.