Per capita is a Latin term that translates to “by head.” It means the average per person and is often used instead of “per person” in statistical observations. The term is commonly utilized when discussing economic data and population descriptions. This includes metrics such as:
- Gross domestic product (GDP)
- Gross national product (GNP)
- Income
Key Takeaways
- Per capita refers to an average measured on a per-person basis.
- It’s used to compare specific economic metrics with the population.
- Common examples include GDP per capita and income per capita.
- Per capita data offers detailed insights compared to aggregate data, allowing for apples-to-apples comparisons between countries with different population sizes.
- This measure is often contrasted with median information, which provides a clearer picture by accounting for outliers.
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Understanding Per Capita
Per capita is a frequently used term in economics and statistics. It helps to measure how certain metrics apply to a population, usually related to a country’s economy. The most common examples include gross domestic product (GDP) per capita and income per capita.
National economic indicators, such as GDP or gross national product (GNP), are useful in aggregate. However, analyzing these figures on a per capita basis offers more detailed information and allows for better comparisons across different countries.
To calculate per capita, simply divide the value of interest (e.g., a country’s GDP) by the population size being analyzed.
Per Capita vs. Median
In contrast to per capita measures, median numbers offer a potentially more accurate depiction of economic metrics like income. The median income is the midpoint in a list of incomes, with half of the population earning above it and the other half below.
For example, the real median household income in the U.S. in 2021 was $70,800, while the per capita income was slightly lower at $62,200. Per capita measures include all citizens, from infants to seniors, and don’t account for outliers, making the median a potentially clearer indicator.
Per Capita and Poverty
The World Bank provides data on total GDP and GDP per capita, which can paint different pictures of a country’s economic state. While aggregate GDP growth might indicate economic improvement, it doesn’t necessarily reflect changes in individual wealth or poverty levels.
For instance, a report showing the world’s GDP grew by 3% might sound optimistic, but it could overlook a simultaneous 1.5% population growth, diluting the significance of the GDP increase. This distinction is crucial for countries with rapidly growing populations where overall GDP might rise even as GDP per capita declines.
Real-World Example
Per capita is essential for comparative economic analysis between countries with different populations. For instance:
- U.S. GDP in 2021 was just over $20 trillion. With a population of approximately 337.3 million, the GDP per capita was $59,500.
- In contrast, China’s GDP was around $17.5 trillion in 2021. However, due to its larger population, China’s GDP per capita was just $16,400.
This comparison shows that despite China’s substantial GDP, its per capita GDP indicates that the average income for Chinese citizens remains lower than that of Americans.
Frequently Asked Questions
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, divide the figure or value by the population size.
What Is the World’s Total GDP Per Capita?
According to the World Bank, the world’s GDP per capita in 2021 was $12,263. With a global population of 7.9 billion, this results in a total global GDP of around $97 trillion.
The Bottom Line
Per capita metrics are valuable for understanding average values on a per-person basis in economics. GDP and income per capita offer insights into a country’s average prosperity and facilitate comparisons across nations. Besides economic data, per capita measures can also be used in non-economic contexts like alcohol consumption or car crashes per capita.
Related Terms: GDP, GNP, median income, economic indicators, world economy.
References
- U.S. Census Bureau. “QuickFacts”.
- Pew Research Center. “For World Population Day, a look at the countries with the biggest projected gains – and losses – by 2100”.
- The World Bank. “GDP (current US$) - Afghanistan”.
- The World Bank. “GDP per capita (current US$) - Afghanistan”.
- Central Intelligence Agency. “The World Factbook - United States”.
- Central Intelligince Agency. “The World Factbook - China”.
