Question 26 - Teachoo Sample Paper - Social Science Class 10 - Paper 2 - Solutions to CBSE Sample Paper - Social Science Class 10 - Social Science Class 10

What are the three main limitations of using per capita income as an indicator of development? 

Answer by Student 

The three main limitations of using per capita income as an indicator of development are:

• It does not reflect the distribution of income among the people. It can hide the inequalities and poverty that exist within a country or a region.

• It does not reflect the non-monetary aspects of well-being such as health, education, environment, freedom, etc. It can ignore the quality of life and human rights that affect the people’s happiness and satisfaction.

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• It does not reflect the differences in the cost of living and purchasing power across countries and regions. It can overestimate or underestimate the actual income and consumption levels of the people.

Detailed Answer by Teachoo

The three main limitations of using per capita income as an indicator of development are:

• It does not reflect the distribution of income among the people. It can hide the inequalities and poverty that exist within a country or a region. For example, a country may have a high per capita income but a large gap between the rich and the poor . This means that only a few people enjoy a high income while the majority of the people suffer from low income and deprivation. This can lower the overall level of human development and social welfare in the country.

• It does not reflect the non-monetary aspects of well-being such as health, education, environment, freedom, etc. It can ignore the quality of life and human rights that affect the people’s happiness and satisfaction. For example, a country may have a high per capita income but a low level of health and education. This means that the people do not have access to adequate health care and education services that can improve their physical and mental capabilities and opportunities. This can lower the overall level of human development and human potential in the country.
  
  
• It does not reflect the differences in the cost of living and purchasing power across countries and regions. It can overestimate or underestimate the actual income and consumption levels of the people. For example, a country may have a high per capita income but a high cost of living. This means that the people have to spend more money to buy goods and services that can meet their basic needs and wants. This can lower the overall level of human development and economic welfare in the country.

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