Lesson eLearning

Why is per capita income alone not a sufficient indicator of human development? State two reasons.

medium 3 marks Class 10 · Economics · Development
Answer
Per capita income hides income disparities and excludes essential non-material aspects of development like health, education, and equality.

Step-by-step solution

  1. Step 1: Identify that per capita income is an average figure calculated by dividing total income by total population.
  2. Step 2: Explain Reason 1: Averaging hides income distribution disparities, meaning a country can have high per capita income while most of its citizens remain poor and a few hold vast wealth.
  3. Step 3: Explain Reason 2: Per capita income measures only material wealth and fails to reflect crucial non-income indicators such as life expectancy, literacy rate, healthcare infrastructure, freedom, and environmental quality.
Common mistake: Confusing per capita income with total national income or focusing only on money without addressing health and education.

Concept tested: Limitations of per capita income

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