What are the Limitations of Average Income and Per Capita Income?
By BYJU'S Exam Prep
Updated on: September 11th, 2023
The Limitations of Average Income and Per Capita Income are social factors like health, education, and others while exclusively discussing the economic quality of life. The amount of money made per capita in a country or region is expressed as per capita income. The average per capita income for an area can be calculated using per capita income.
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Limitations of Average Income and Per Capita Income
The average per capita income can also be used to assess the standard of living and quality of life of a population. Average income is the amount of money that each person earns on average in a particular place over a period of time.
- Income distribution cannot be estimated from per capita income. Most of the wealth may end up in the hands of a select few.
- It is better to have a poor society with equitable distribution of wealth than a prosperous nation with unequal income distribution.
- Many facilities affecting the quality of life like educational and medical facilities are not considered while computing per capita income. It is affected by population density.
Based on the above evaluation, we can also say that the countries with high national incomes and significant populations will also have low per capita income.
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