What Is Per Capita?
Per capita is a Latin term that translates to "by head." Per capita means the average per person and is often used in place of "per person" in statistical observances. The phrase can be used for almost any kind of population description but is common when discussing economic data. This could include a country's:
- Gross domestic product (GDP)
- Gross national product (GNP)
- Per capita is a term used in economic and statistical analysis that means per person.
- Per capita is used when comparing a certain economic metric to a population.
- The most common instances of per capita are gross domestic product (GDP) per capita and income per capita.
- Per capita information provides more granular data than just aggregate information. It is often used as an apples-to-apples comparison between countries with different population sizes.
- Per capita information is often contrasted with median information, which provides a clearer picture as it considers outliers.
Understanding Per Capita
Per capita is a term primarily used in economics and statistics to determine how certain metrics apply to a population. It is most often used in reference to metrics of a country and how that metric applies to the population of that country. The most common uses of per capita are gross domestic product (GDP) per capita and income per capita.
For national economic indicators, such as gross domestic product (GDP) or gross national product (GNP), the total figure is certainly of interest. However, the per capita basis will give the analyst more granular information and allows for better apples-to-apples comparisons across different countries.
To calculate per capita, take the number you are interested in (e.g. a country's GDP) and divide it by the population being analyzed.
Per Capita vs. Median
In contrast to per capita measures, median numbers, such as those for income, provide an arguably more accurate picture of how much the residents of a particular country or area are likely to earn.
The median income is the income level in the very middle of a list of incomes. Exactly half of the people considered earn above the median income figure while the other half earn below that number. Real median household income in the United States in 2021 was $70,800, whereas per capita income was a bit lower at $62,200.
Per capita expresses the average number for all of the citizens of a particular country or area. Therefore, it can be a misleading number because it includes everyone from infants to senior citizens, and fails to account for statistical outliers. The median income in this instance will take into account any outliers.
Per Capita and Poverty
The World Bank issues data on total GDP and GDP per capita but each statistic can provide a conflicting perspective on the economic state of a country and the wealth of its people.
According to some economists, a country’s aggregate economic growth, or its overall GDP, is not what matters when the concern is the poverty level of individuals in a country. For example, if an outlet reports that the world's GDP grew by 3%, it may sound like great news, but it would fail to take into consideration that the world's population grew by 1.5%, making the GDP number less impressive.
For countries where the population is not increasing rapidly, the difference between GDP per capita growth and total GDP growth is minimal. However, for countries with rapidly growing populations such as those in Africa and South Asia, reporting GDP growth can be highly misleading because a country can show GDP growth overall but a decline in per capita growth. Afghanistan has been used as an example where over the past several years the nation's economy has been growing overall but declined on a per capita basis.
Example of Per Capita
In economic analysis, per capita is also used as an apples-to-apples comparison between countries, as all countries have different populations.
For example, U.S. gross domestic product (GDP) was just over $20 trillion in 2021 according to the CIA World Factbook (the latest information available from the CIA). The United States' population in the same period was approximately 337.3 million. That results in a GDP per capita of $59,500.
China is now the second-largest economy with a GDP of around $17.5 trillion in 2021—or 12,5% lower than the United States'. However, China has far more people than the United States, and so the per capita GDP for China is just $16,400. Thus, using per capita GDP shows that most Chinese citizens are still earning far less than the average American despite the country's aggregate output.
What Does Per Capita Mean in Latin?
In Latin per capita means "by heads" or "for each head".
How Do You Determine Per Capita Figures?
To calculate per capita, simply divide the figure or value in question by the size of the population.
What Is the World's Total GDP Per Capita?
According to the World Bank, the total world's GDP per capita was $12,263 in 2021. With 7.9 billion people in the world in 2021, that amounts to a total global GDP of around $97 trillion.
The Bottom Line
Per capita is a way of averaging values on a per-person basis to better understand how each individual shares in aggregated figures. In economics, GDP and income per capita are used to understand a country's average level of prosperity and for making like comparisons across countries. You can also use per capita measures of non-economic data, such as alcohol consumption per capita or car crashes per capita.