Limitations of averages
Also called: Averages hide disparities · Topic: Measuring Development: Income, HDI and Sustainability · NCERT: Class 10, Ch 1 "Development"
Meaning
An average (mean) income is useful for comparing countries. But it does not show how income is shared among people. Two countries with the same average can be very different, because a few very rich people can pull the mean up. The median, the income of the middle person, often shows the typical citizen better.
Example
NCERT (Class 10) compares two countries with five citizens each. Country A's monthly incomes are Rs 9,500, 10,500, 9,800, 10,000 and 10,200. Country B has four people at Rs 500 each and one at Rs 48,000. Both average Rs 10,000. But B's median is only Rs 500. If your place in the country were decided by lottery, most people would choose A, where income is shared more equally.
Don't confuse with
- Mean vs median: The mean is total income ÷ number of people, and a few extreme values can pull it up. The median is the middle value, so extremes do not distort it.