What is Per Capita Income?

Per capita income means how much each individual receives, in monetary terms, of the yearly income that is generated in their country through productive activities. That is what each citizen would receive if the yearly income generated by a country from its productive activities were divided equally among everyone. Per capita income is usually reported in units of currency per year. While per capita income reflects gross national product per capita income when comparing nations, it is also used to compare municipalities within nations. When determining the per capita income of a community, however, it is not economic activity that is divided by the population, but the total personal income.

Per capita income as a measure of wealth

Per capita income is often used as a measure of the wealth of the population of a nation, particularly in comparison to other nations. It is usually expressed in terms of a commonly-used international currency such as the Euro or United States dollar, and is useful because it is widely known and produces a straightforward statistic for comparison.

Particularly when comparing countries with substantially different levels of wealth, however, it has several weaknesses as a measurement.

• Economic activity that does not result in monetary income, such as services provided within the family, or for barter, are usually not counted. The importance of these services will vary widely between different economies, both between countries and among different groups within a country. See: Informal economy
• Per capita income gives no indication of the distribution of that income within the country, so a small wealthy class can increase the measured per-capita income far above that of the majority of the population. See: Income inequality metrics
• Differing currency exchange rates between countries mean that a given amount of money (for example, one US dollar) has differing values in different places. See: Purchasing power

Some national per capita income levels

Data on per capita income based on a country's total personal income are rarely available. Thus, the Gross domestic product (GDP) is more commonly used. However, the total personal income is generally lower than the gross domestic income.

A list of the top ten countries, and the lowest-ranking country, by GDP per capita (in terms of purchasing power parity - PPP - and nominal values) for the year 2005 x

Nominal per capita				PPP per capita
1.	Luxembourg	80,288		Luxembourg	69,800
2.	Norway	64,193		Norway	42,364
3.	Iceland	52,764		United States	41,399
4.	Switzerland	50,532		Ireland	40,610
5.	Ireland	48,604		Iceland	35,115
6.	Denmark	47,984		Denmark	34,740
7.	Qatar	43,110		Canada	34,273
8.	United States	42,000		Hong Kong, SAR	33,479
9.	Sweden	39,694		Austria	33,432
10.	Netherlands	38,618		Switzerland	32,571
179	Malawi	161		Malawi	596

''Source:

• International Monetary Fund, World Economic Outlook Database, September 2006

See also

• List of countries by GDP (nominal) per capita - GDP at market or government official exchange rates per inhabitant
• List of countries by GDP (nominal) - GDP with currencies converted at market exchange rates
• List of countries by GDP (PPP) - GDP calculated at purchasing power parity (PPP) exchange
• List of countries by GDP (PPP) per capita
• Lending
• Purchasing power parity

External links

• http://web.worldbank.org/servlets/ECR?contentMDK=20421402&sitePK=239419
• http://www.imf.org/external/pubs/ft/weo/2005/02/data/index.htm
• per capita income by U.S. state