Income Per Capita

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DEFINITION of 'Income Per Capita'

A measure of the amount of money that is being earned per person in a certain area. Income per capita can apply to the average per-person income for a city, region or country and is used as a means of evaluating the living conditions and quality of life in different areas. It can be calculated for a country by dividing the country's national income by its population.

INVESTOPEDIA EXPLAINS 'Income Per Capita'

Because per-capita income is the overall income of a population divided by the number of people included in the population, it does not always give an accurate representation of the quality of life due to the function's inability to account for skewed data. For instance, if there is an area where 50 people are making $1 million per year and 1,000 people making $100 per year the per capita income is $47,714, but that does not give a true picture of the living conditions of the entire population.

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