Explain five problems of using national income statistics to compare the living standards of citizens of Kenya and Tanzania. (10 marks)

Problems of using national income statistics to compare the living standards of citizens of Kenya and Tanzania

​Problems of using national income statistics to compare the living standards of citizens of Kenya and Tanzania include:

• The two countries may have used different currency values to calculate their national income hence different standards of measure.
• One country could be having a large subsistence sector whose income may not have been included in the measure of their income.
• The levels of income distribution in one country may be too skewed compared to the other which may have a fair income distribution.
• The two countries may have different references and economic priorities.
• The two countries could be different in terms of resource endowment hence different abilities to generate income.
• The climatic conditions in the two countries may be different leading to difference in demand and production.
• Production activities may affect the health of citizens in the two countries differently.
• The political realities in the two countries could be different affecting their stability and the security of citizens.
• The degree of accuracy of the national income statistics are also different in both countries.

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