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

Explanation

Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Are people in one country better off than others in a different company? To answer this question we use averages. Average income is a useful method for comparison but it has certain limitations which are as follows:
(i) Average income does not tell us how the income is distributed among the people i.e., whether the distribution is equitable or not, it is not clear from per capita income.
(ii) An average is influenced by extreme values.
(iii) An average may not give an idea about the formation of the series. Thus, average hides disparities. Averages are affected by the numerical value only. Other factor like character of a person, living quality etc. are not considered which are also important for making comparison.