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'''Per capita income''' or average income or income per person is the [[mean]] [[income]] within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as [[Gross domestic product|GDP]] or [[Gross national income]]) and dividing it by the total population. It does not attempt to reflect the distribution of income or wealth.
'''Per capita income''' or average income or income per person is the [[mean]] [[income]] within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as [[Gross domestic product|GDP]] or [[Gross national income]]) and dividing it by the total population. It does not attempt to reflect the distribution of income or wealth.


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== Per capita income as a measure of prosperity ==

Per capita income is often used as average income, a measure of the wealth of the population of a nation, particularly in comparison to other nations. It is usually expressed in terms of a commonly used international currency such as the [[Euro]] or [[United States dollar]], and is useful because it is widely known, easily calculated from readily-available GDP and population estimates, and produces a useful statistic for comparison.

Per capita income has several weaknesses as a measurement of prosperity:

* Comparisons of per capita income over time need to take into account changes in prices. Without using measures of income adjusted for [[inflation]], they will tend to overstate the effects of economic growth.

* International comparisons can be distorted by differences in the costs of living between countries that aren't reflected in exchange rates. Where the objective of the comparison is to look at differences in living standards between countries, using a measure of per capita income adjusted for differences in [[purchasing power parity]] more accurately reflects the differences in what people are actually able to buy with their money.


==See also==
==See also==

Revision as of 13:34, 16 November 2012

Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross national income) and dividing it by the total population. It does not attempt to reflect the distribution of income or wealth.

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See also