What is Income Per Capita?

Income for an area or country it totaled up and divided by the total population of the area to give us the Income Per Capita statistic.

Per capita is Latin for “by head,” and income per capita takes every man, woman, and child into account. Income per capita is a statistic that divides the total amount of income reported in an area by the total population of the area. This shows us how much income, as a resource, is available on average to each person in the area.

It is used to compare the standard of living in various areas or countries. Some states, for instance, have a much lower per capita income than other states, and these states might receive more federal aid and nonprofit grants than the other states for education and infrastructure. Since schools tend to be funded with taxes based on income amount, this would seem to be a somewhat fair and humanitarian thing to do.

Done on a national scale, one can use Gross National Income (GNI) per capita. Economists might also look at GDP per capita, which would alternatively be the amount produced by each person, in theory.

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