Question

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

Answer 1

Whenever we need to analyse a big amount, it is difficult to analyse individual data. Hence, it is important to use averages in such cases. Averages have some limitations. Average figure hides disparities. For example, let us consider two countries, A and B with bot having 5 citizens.

 

 

	I	II	III	IV	V	Average
Country:A	9500	10500	9800	10000	10200	10000
Country:B	500	500	500	500	48000	10000

 

 

Even though both the countries have identical average income, country A is preferred because it has more equitable distribution. Hence, while average income is useful for comparison it does not tell us how this income is distributed among people.