Loading the player...

What does 'Per Capita' mean

Per capita is a Latin term that translates into "by head," basically meaning "average per person." Per capita can take the place of saying "per person" in any number of statistical observances. In most cases, the phrase is used in relation to economic data or reporting, but it can also be used in almost any other occurrence of population description.

BREAKING DOWN 'Per Capita'

When presenting national economic indicators such as gross domestic product (GDP) or gross national product (GNP), the media typically quotes these numbers on a per capita basis. Determining the per capita of any number is simple. Take the total of the number being referenced, and divide by the number of people involved. For example, as of 2011, the United States had a population of about 313.4 million people and a GDP of $15.09 trillion. In this case, the per capita income, or average income per person, is equal to approximately $48,000.

When discussing the economy of a country or the purchasing power of its people, economists frequently talk about per capita GDP, per capita GNP and per capita gross national income (GNI). GDP and GNP both measure the market value of all goods and services produced in an economy, but these two indicators vary slightly on how they define the economy of a country. In particular, GNP takes into account the economic activities of citizens living outside of the country being analyzed, while GDP only takes into account economic activities happening within a country's borders. GNI is similar to GNP.

Although per capita measurements are a useful way to express a number of economic indicators, it is not the most accurate way to talk about individual income in a country. Per capita GDP or GNP, sometimes referred to as per capita income, expresses the average income for the citizens of a particular country or area, but it can be a misleading number as it includes all people from infants to senior citizens and fails to account for statistical outliers.

The Difference Between Per Capita and Median Income

In contrast, median income numbers provide a more accurate picture of how much income the residents of a particular country or area are likely to earn. Median income is the income level in the very middle of a list of incomes. Exactly half of the people being considered earn above the median income figure, while the other half earn below that number. In addition, when calculating median income, the U.S. Census Bureau does not take into account people under the age of 15.

Just as there are different per capita or average measurements, there are also a range of median measurements. For example, there is median household income as well as median family income.

RELATED TERMS
  1. Income Per Capita

    A measure of the amount of money that is being earned per person ...
  2. Per Capita Gross Domestic Product

    Per capita GDP is a measure of the total output of a country ...
  3. Developed Economy

    While there is no one, set definition of a developed economy ...
  4. Household Income

    The combined gross income of all the members of a household who ...
  5. Gross National Product - GNP

    Gross national product (GNP) is an economic statistic that includes ...
  6. Net Debt Per Capita

    A measurement of the value of a government's debt expressed in ...
Related Articles
  1. Insights

    Explaining Income Per Capita

    Income per capita measures the amount of money that’s earned per person in a defined area.
  2. Investing

    Understanding Per Capita

    Per capita is a Latin term that means “by head.”
  3. Taxes

    5 States With Low Taxes and High Income

    When it comes to saving for retirement, living in one of these five states with low taxes and high income can better position you to build your nest egg.
  4. Investing

    3 Emerging Markets With Bright Prospects

    Learn about emerging and developed Asian markets, their economic machines, and which key factors contribute to real and per capita GDP growth.
  5. Insights

    Healthiest And Safest European Economies

    Economic indicators are to economists what symptoms are to doctors: signs of the relative well-being of the patient.
  6. Insights

    What's the GNP?

    Gross national product (GNP) is one of many metrics economists use to measure a country’s economic output. For any one year, GNP equals the market value of all the goods and services produced ...
  7. Insights

    The Functional Difference Between GDP and GNP

    Both gross domestic product and gross national product try to measure the market value of all goods and services an economy produces.
  8. Investing

    An Investor's Guide to the European Economy

    Below is a brief overview of the countries which make up the Eurozone and how their economy and markets have been performing in order to put things in perspective for an investor.
  9. Investing

    How To Use Gross National Product As An Indicator

    Learn what the GNP truly represents, and how its misuse can manipulate the facts.
RELATED FAQS
  1. How does gross domestic product (GDP) affect standard of living?

    Find out how gross domestic product is used to measure standard of living. Find out which alternative metrics rely on GDP ... Read Answer >>
  2. What is the formula for calculating gross national product (GDP)?

    Find out how to calculate a country's gross national product (GNP), which is a method of accounting for the total income ... Read Answer >>
  3. Which countries are most productive in terms of GDP?

    Countries around the world constantly compete with one another to be the most innovative and productive. Read to see which ... Read Answer >>
  4. What country has the wealthiest overall population?

    Find out which country has the wealthiest overall population, based on per capita income. Discover how this wealth was created ... Read Answer >>
  5. What does the rule of 70 indicate about a country's future economic growth?

    Find out more about the rule of 70, what it measures and what it indicates about a country's future economic growth rate. Read Answer >>
  6. Is China a developed country?

    Understand why China, despite having the world's second-largest economy and third-largest military, is not yet classified ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center