Per capita income

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Gross median per-capita income at purchasing power parity, based on 2006-2012 data from Gallup Countries by gross median per-capita income in Int$ (PPP).png
Gross median per-capita income at purchasing power parity, based on 2006–2012 data from Gallup

Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year.

Contents

In many countries, per capita income is determined using regular population surveys, such as the American Community Survey. [1] This allows the calculation of per capita income for both the country as a whole and specific regions or demographic groups. However, comparing per capita income across different countries is often difficult, since methodologies, definitions and data quality can vary greatly. [2] [3] Since the 1990s, the OECD has conducted regular surveys among its 38 member countries using a standardized methodology and set of questions. [3]

Per capita income is often used to measure a sector's average income and compare the wealth of different populations. Per capita income is also often used to measure a country's standard of living. When used to compare income levels of different countries, it is usually expressed using a commonly used international currency, such as the euro or United States dollar. It is one of the three components of the Human Development Index of a country.

Limitations

While per capita income can be useful for many economic studies, it is important to keep in mind its limitations.

See also

Related Research Articles

<span class="mw-page-title-main">Gross domestic product</span> Market value of goods and services produced within a country

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic health of a country or region. Definitions of GDP are maintained by several national and international economic organizations, such as the OECD and the International Monetary Fund.

Purchasing power parity (PPP) is a measure of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a market basket at one location divided by the price of the basket of goods at a different location. The PPP inflation and exchange rate may differ from the market exchange rate because of tariffs, and other transaction costs.

<span class="mw-page-title-main">Gross national income</span> Total domestic and foreign economic output claimed by residents of a country

The gross national income (GNI), previously known as gross national product (GNP), is the total domestic and foreign financial output claimed by the residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.

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Real income is the income of individuals or nations after adjusting for inflation. It is calculated by dividing nominal income by the price level. Real variables such as real income and real GDP are variables that are measured in physical units, while nominal variables such as nominal income and nominal GDP are measured in monetary units. Therefore, real income is a more useful indicator of well-being since it measures the amount of goods and services that can be purchased with the income. Growth of real income is related to real gross national income per capita growth.

The international dollar, also known as Geary–Khamis dollar, is a hypothetical unit of currency that has the same purchasing power parity that the U.S. dollar had in the United States at a given point in time. It is mainly used in economics and financial statistics for various purposes, most notably to determine and compare the purchasing power parity and gross domestic product of various countries and markets. The year 1990 or 2000 is often used as a benchmark year for comparisons that run through time. The unit is often abbreviated, e.g. 2000 US dollars or 2000 International$.

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References

  1. ↑ "American Community Survey and Puerto Rico Community Survey: 2021 Subject Definitions". U.S. Census Bureau . p. 90. Retrieved 2024-01-28.
  2. ↑ "The world's richest countries in 2023". The Economist. ISSN   0013-0613 . Retrieved 2024-01-28.
  3. 1 2 Förster, Michael; d'Ercole, Marco (2012). Besharov, Douglas J.; Couch, Kenneth A. (eds.). Counting the poor: new thinking about European poverty measures and lessons for the United States. International policy exchange series. Oxford: Oxford Univ. Press. p. 28. ISBN   978-0-19-986058-6.
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