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What does 'Per Capita' mean

Per capita is a Latin term that translates into "by head," and basically means the "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), people are often interested in the total but also the per capita basis. Determining the per capita of any number is relatively straightforward. Take the total of the number being referenced, and divide that by the number of people involved. For example, as of 2016, the United States had a population of about 320 million people and an aggregate GDP of $16.7 trillion. In this case, the per capita income for 2016, or average income per person, was equal to approximately $52,195.

Per capita measures are often used when analyzing the relative state of a country's population. For example, China is now the second largest economy, with a GDP of $11.6 trillion in 2016 - around 40 percent lower than the U.S. However, China has far more people than the United States, and so the per capita GDP for China was just $8,123 - almost 6.5 times less than the average American. 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. We should still be cautious when looking at these measures because per capita will express the average income for all the citizens of a particular country or area. It can be a misleading number, as it includes everyone from infants to senior citizens and fails to account for statistical outliers.

The Difference Between Per Capita and Median Income

In contrast to per capita measures, median numbers, such as for income, provide an arguably more accurate picture of how much 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 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. The median income in the U.S. for 2016 was $56,516 - about 8 percent greater than the per capita income. For China, in 2016 the median income was $4,850, or almost half of the per capita income.

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