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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.

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