How to Calculate Per Capita Income

Per capita income is an economic indicator that basically shows the average income of every individual in a certain area if that area’s total income was distributed equally among them.

The aforementioned economic indicator is generally used as a measure of an area’s (a country in most cases) standard of living and is typically expressed in Euros or United States dollars.

The use of per capita income as a measurement of prosperity is often criticised for not taking various factors such as price difference, wealth distribution and cost of living into account while making comparisons between different countries.

If you wish to calculate the per capita income of an area, then there is certain information that you will need to acquire.

Things Required:

– GDP or National Income of the area
– Total population of the area
– Calculator

Instructions

  • 1

    The first thing that you need to do is determine the Gross Domestic Product (GDP) or National Income of the area that you wish to calculate the per capita income for. If you want to calculate the per capita income for the population of an entire country, then you can get the value of GDP or National Income for the country from the World Bank website.

  • 2

    Get an estimate of the population in the area by contacting the union office or, in case you are making the calculations for the whole country, the World Bank website. You will obviously be working with an estimate of population, as an accurate figure is nearly impossible to get.

  • 3

    Once you have acquired the value of GDP or National Income and the population estimate for a area, put the values in the formulate “GDP or National Income/total population” to get the per capita income. For example, if the GDP of a country for the year 2012 is 550 million dollars and the total population is 1 million, then the per capita income for this country is “550 million/1 million”, which will amount to 550 dollars. This basically means that every individual in this country earns an average of 550 dollars per annum.

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