By definition "per capita" means "per person" in a given area. This word is widely used to report an average per person in statistics, economics, and business.
Definition and examples of per capita
The term "per capita" simply means "per person." The phrase is most often used to put data into context. When comparing data between two groups, breaking it down on a per-person or "per capita" basis can help verify that the comparisons are correct.- Alternate definition: Per capita is a legal term with a very specific definition. It refers to the equitable distribution of an estate's assets among all live beneficiaries. This is different from "per stirpes." That is, the estate is divided among the family branches, independent of the number of persons in each branch.
- When comparing the economic statistics of countries with different population sizes, per capita is frequently used. Gross domestic product (GDP) and income are the two most widely used per capita indicators.
How do you calculate per capita?
Divide a statistical measurement for an organization by the population of that organization to get per capita. So, if ten persons own 1,000 apples, we may say that there are 100 apples per capita.How does per capita work?
Per capita calculations can help show how this form of measurement works by demonstrating how they clarify GDP data. GDP is a monetary measure of everything generated inside a country's borders. It's simply a gauge of a country's economic size, and it's usually reported quarterly or annually. GNP (Gross National Product) is a similar metric that was phased out in 1991 in favor of GDP. The gross domestic product (GDP) does not include money earned in the United States by foreign people or enterprises. Economists will change raw GDP data to better compare countries because they have so many differences. Purchasing power parity, which calculates the U.S. dollar value of a country's local goods and services, eliminates the effects of exchange rates across currencies. They remove the effects of inflation and deflation by using real GDP. A per capita measurement is another technique for better comparing GDP. GDP per capita is calculated by dividing a country's GDP by its population. After China, the United States has the world's second-largest economy. With 334 million people residing in the United States in 2021, it is also the world's third most populated country. Divide the $22 trillion GDP of the United States by the population of 334 million to get a ballpark estimate of GDP per capita. Gross National Income Per Capita The gross national income per capita is another common per capita figure. The GDP plus revenue that residents earn from foreign investments is divided by the population to arrive at this value. It comprises dividends and interest from foreign sources. The World Bank defines this as all income made by citizens and businesses in a country, regardless of where the person works or where the firm is situated. The GNI per capita in the United States was $60,990 in 2017.The Census Bureau's income per capita measurement
The United States Census Bureau calculates its measure of income per capita. Earned income is included in this figure, but benefits are not. It includes investment income but excludes capital gains from property sales. Government payments, such as Social Security, welfare, and government pensions, are also included. Food stamps, Medicare/Medicaid benefits, and tax returns are not included. Because of these discrepancies, the result is usually substantially lower. The Census Bureau estimated a per capita income of little over $34,000 in 2019.Limitations of per capita
While per capita can provide useful context for a wide range of data, it isn't the greatest way to examine all forms of data. When it comes to per capita income in the United States, for example, the median income is a more accurate depiction of average Americans' real earnings since it accounts for income inequality that per capita income can obscure. The median income is the point at which half of the population earns more and half earns less. It's a more meaningful figure because it takes into account the income of the very few really wealthy people who tilt the average upward.Key takeaways
- The term "per capita" comes from Latin and means "per person."
- The term "per capita" is frequently used to put facts into context.
- By dividing a measurement by the population being measured, you may calculate the per capita measurement.
- The per capita measurement can aid economists in determining a country's standard of living.
