on the understanding that more income means more access to things that human beings need to fulfill their basic requirements. Whatever people like and should have, they will be able to get with greater income. So, greater income itself is considered to be one important goal.

Now, what is the income of a country? Intuitively, the income of the country is total of the income of all the residents of the country. This gives us the total income of the country.

However, for comparison between countries, total income is not such a useful measure. 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 country? Hence, we compare the average income which is total income of the country divided by total population. The average income is also called per capita income.

This criterion is used in the World Development Report brought out by the World Bank to classify countries. Countries with per capita income of US $12,055 and above per annum in 2017 are called high income countries or rich countries. Those with per capita income of US $995 or less per annum in 2017 are called low-income countries. Until less than a decade ago, India came in the category of low income countries. Now it falls under the category of middle income countries. As the per capita income in India rose faster than that of many countries, its position was improved. We will read more about growth of incomes of people in India in the next chapter.

The rich countries, excluding countries of West Asia and certain other small countries are generally called developed countries.

While ‘averages’ are useful for comparison, they also hide many disparities.

For example, let us consider two countries, A and B. For the sake of simplicity, we have assumed that they have only five citizens each. Based on data given in Table 2, calculate the average income for both the countries.