What Is Per Capita?
You need to know that per capita is a Latin term meaning 'by head,' and I use it in English to mean the average per person, especially when I'm dealing with statistics or economic data. When I say something is expressed per capita, it means that amount for each person in the group.
I see this phrase applied to almost any population description, but it's most common in economic contexts. For a country, this could cover things like gross domestic product (GDP), gross national product (GNP), or income.
Key Takeaways
- Per capita is used when comparing a certain economic metric to a population.
- The most common instances of per capita are 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
Let me explain that per capita is a term I primarily use in economics and statistics to figure out how certain metrics apply to a population. You'll see it most often for a country's metrics and how they break down per person. The key uses are GDP per capita, which divides the country's total economic output by its population, and income per capita, which gives the average income per person in an area.
For national indicators like GDP or GNP, the total figure matters, but I find the per capita basis gives more detailed information and allows better comparisons across countries. To calculate it, you take the number you're interested in, like a country's GDP, and divide it by the population.
Per Capita vs. Median
In contrast to per capita, I consider median numbers, like for income, to give a more accurate picture of what residents in a country or area actually earn. The median income is right in the middle of a list of incomes, with half above and half below it. For example, in the US in 2023, real median household income was $78,538, but per capita income was $43,289.
Per capita gives the average for all citizens, including infants and the elderly, and it doesn't handle outliers well, which can make it misleading. Median takes those outliers into account for a clearer view.
Per Capita and Poverty
When I look at World Bank data on total GDP and GDP per capita, each can paint a different picture of a country's economy and its people's wealth. Some economists argue that total GDP growth isn't what counts for individual poverty levels. For instance, if global GDP grows by 3% but population grows by 1.5%, that growth isn't as impressive.
For countries with stable populations, GDP growth and per capita growth are similar, but in places with fast population increases like Africa and South Asia, total GDP might rise while per capita falls, which misleads on real progress.
Example of Per Capita
In economic analysis, I use per capita for fair comparisons between countries with different populations. Take the US in 2023: GDP was $27.72 trillion with a population of about 334.91 million, giving a per capita GDP of $82,769.
China's GDP was $17.79 trillion, but with a much larger population, its per capita GDP was only $12,614. This shows that despite China's total output, most citizens earn far less than the average American.
What Does Per Capita Mean in Latin?
In Latin, per capita means 'by head' or 'for each head.'
How Do You Determine Per Capita Figures?
To find per capita, you divide the figure or value by the population size.
What Is the World’s Total GDP Per Capita?
The world's GDP per capita was $13,170 in 2023, based on a global GDP of around $106.17 trillion and a population of 8.06 billion.
The Bottom Line
Per capita averages values per person to help you understand individual shares in totals. In economics, I use GDP and income per capita to gauge a country's prosperity and compare it to others. You can apply it to non-economic data too, like alcohol consumption or car crashes per capita.
Other articles for you
Vertical equity ensures that higher-income individuals pay more taxes based on their ability to pay.
Covenants are formal agreements that specify actions or restrictions in finance, property, law, and religion to protect involved parties.
A downtrend represents a gradual decline in the price or value of stocks, commodities, or markets due to shifting investor sentiment and supply-demand imbalances.
Gross value added (GVA) measures the economic contribution of producers, industries, sectors, or regions by subtracting intermediate costs from output and adjusting for subsidies and taxes.
Qtum is a cryptocurrency blending Bitcoin's security and Ethereum's smart contracts for business use.
Dim sum bonds are RMB-denominated bonds issued in Hong Kong to attract foreign investors bypassing China's capital controls.
EBIAT is a non-GAAP metric that measures a company's profitability after taxes but before interest, providing insights into cash available for debt repayment.
The energy sector includes companies involved in producing and distributing various energy sources to power the economy.
Net current asset value per share (NCAVPS) is a Benjamin Graham metric for identifying undervalued stocks by comparing liquidation value to share price.
A deposit is money transferred to a bank for safekeeping or as security for goods and services.