Population based guesstimates

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This post is a part of a series of guesstimate examples . This GStimate is an example that requires a population based approach. So it is necessary for one to know key fundamental infos like the population of your country, it's demographics etc etc. So here goes

Q: Estimate the total number of ATM's in India ??

So before you attempt to make a comment or answer the question, take some time to think about your approach, create a basic mindmap for it and make sure that your approach is simple, understandable and most importantly does not take you to a dead end.

Here I am going to take a top to bottom approach, that is first I take an assumption for the entire population and then work my way down.

I am going to start my approach with a hypothesis that is I take my campus as measure of standard, and state that since the population of my college campus is 10000, and almost everyone here have got an ATM card. Also there are 2 ATMs in our campus, which roughly proportionates to 1 ATM for every 5000 people.

Now coming back to estimation for a country, I assume that every bank account holder in our country have got an ATM card. I assume the total population of India to be 1.2Billion though it is 1.3Billion (remember to take easy number preferably a multiple of 4 for easier calculation).

Then I am going to divide the population based on rural and urban settlements, which has a ratio of 60/40 rural to urban ratio. Which translates to 60% of 1.2 Billion which is 720 million and that or urban population is 40% of 1.2Billion equaling 480million.

Further down I am going to divide the population based on the age distribution given below

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I assume that in urban areas people are more averse of their personal finance and hence every children in the age group of 10 to 20 years have got a joint account with their parents. So each of these accounts have got an ATM card.

Assuming equal distribution I take the percentage of children in the age group of 10–20 are 20% of the population, which means 20% of 720 million which is 144 million.

Whereas in rural areas I assume that none of the population in the age group of 0–20 have got an joint account.

Coming to the age group of 20 to 60 I assume that everyone in this age group living in the cities have got an account because of the reason that they are either working or retired with a pension account. But I make a discount of 10% for the population in this age group in the rural areas because of the fact that India is still a developing country and one of the major occupations here is agriculture which does not provide any retirement fund.

Hence 50% of 720 million is 360 million and 40% of 480 million is 192 million.

I neglect the population above 60 years of age regardless of their region of settlement to have not possessing an ATM card regardless of whether they have a bank account or not.

Now summing up the entire population possessing bank accounts we get a population of 696 million.

Using our earlier hypothesis which assumes 1 ATM for every 2000 people we get the total number of ATMs in India to be in 139,200 places. In reality the total number of ATMs in India as of 2016 is 104,000 which is off from our estimated value. But remember that the interviewer is more worried about your approach rather than the accuracy of your estimate.

Hope this example gives you a basic framework to approach a guesstimate, make sure you practice on your own and work on your presentation skills. So long !!

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