Development

Question

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

Solution

Averages are used only to get an idea of the income per individual within a specified time period.

Yes, because ‘averages’ are useful for comparison but they hide disparities.

For example, let us consider the two countries, A and B. For the sake of simplicity, we have assumed that they have only five citizens each. We can represent this situation in the following table :

Table : Comparison of two countries

Countries	Monthly Incomes of Citizens in 2007 (in Rupees)
	1	II	III	IV	V	Average
Country A	9500	10500	9800	10000	10200	10000
Country B	500	500	500	500	48000	10000

Here we see that inspite of a large disparity in distribution of income among citizens of the “B” country, the average is worked out of same amount i.e., Rs. 10,000. Poor citizens are receiving only Rs. 500 each while one among them is earning Rs. 48,000 per month. Thus, country “B” is achieving only economic development while it apears from almost equal figures for each citizens of country “A” that there is honoured human development. People therefore, would like to settle in country “A” instead of country “B”.

Some More Questions From Development Chapter

Assume there are four families in a country. The average per capita income of these families is Rs. 5000. If the incomes of three families is Rs. 4000, Rs. 7000 and Rs. 3000 respectively, what is the income of the fourth family?

What is the main criterion used by the World Bank in classifying different countries? What are the limitations of this criterion, if any?

In what respects is the criterion used by the UNDP for measuring development different from the one used by the World Bank?