Per capita income

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Per capita income or income per person is a measure of 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.

[edit] Per capita income as a measure of prosperity

Per capita income is often used as 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
straightforward statistic for comparison.
Per capita income has several weaknesses as a measurement of prosperity:

As it is a mean value, it does not reflect income distribution. If the distribution of income
within a country is skewed, a small wealthy class can increase per capita income far
above that of the majority of the population. In this respect Median income is a more
useful measure of prosperity than per capita income, because it is less influenced by the
outliers.

Economic activity that does not result in monetary income, such as services provided
within the family, or for barter, are usually not counted. The importance of these services
varies widely among different economies.

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 incomes.

[edit] See also

List of countries by GDP (nominal) per capitaGDP at market or government official

exchange rates per inhabitant

List of countries by GDP (PPP) per capitaGDP calculated at purchasing power parity
(PPP) exchange per inhabitant

List of countries by GNI per capita

List of countries by income equality

Total personal income

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This page was last modified on 6 January 2012 at 23:44.

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