Per capita income (PCI) measures the average income earned per person in a specific area and year, often calculated using surveys like the American Community Survey. While comparing PCI across countries can be challenging due to varying methodologies, the OECD provides standardized data for its member countries. PCI is commonly used to assess a sector's average income and compare populations' wealth, as well as to gauge a country's standard of living. When comparing internationally, PCI is expressed in widely accepted currencies like the euro or the United States dollar. It is also a key part of the Human Development Index.
Limitations
While per capita income can be useful for many economic studies, it is important to keep in mind its limitations.
- Comparisons of per capita income over time need to consider inflation. Without adjusting for inflation, figures tend to overstate the effects of economic growth.
- International comparisons can be distorted by cost of living differences not reflected in exchange rates. Where the objective is to compare living standards between countries, adjusting for differences in purchasing power parity will more accurately reflect what people are actually able to buy with their money.
- It is a mean value and does not reflect income distribution. If a country's income distribution is skewed, a small wealthy class can increase per capita income substantially while the majority of the population has no change in income. In this respect, median income is more useful when measuring of prosperity than per capita income, as it is less influenced by outliers.
- Non-monetary activity, such as barter or services provided within the family, is usually not counted. The importance of these services varies widely among economies.
- Per capita income does not consider whether income is invested in factors likely to improve the area's development, such as health, education, or infrastructure.
See also
- Disposable household and per capita income
- List of countries by average wage
- List of countries by GDP (nominal) per capita—GDP at market or government official exchange rates per inhabitant
- List of countries by GDP (PPP) per capita—GDP calculated at purchasing power parity (PPP) exchange per inhabitant
- List of countries by GNI (nominal) per capita
- List of countries by GNI (PPP) per capita
- Real income
- List of countries by GNI per capita growth
- List of countries by income equality
- Total personal income
- List of U.S. states by adjusted per capita personal income
References
"American Community Survey and Puerto Rico Community Survey: 2021 Subject Definitions". U.S. Census Bureau. p. 90. Retrieved 2024-01-28. https://www.census.gov/quickfacts/fact/note/US/INC910222 ↩
"The world's richest countries in 2023". The Economist. ISSN 0013-0613. Retrieved 2024-01-28. https://www.economist.com/graphic-detail/2023/12/15/the-worlds-richest-countries-in-2023 ↩
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. 978-0-19-986058-6 ↩
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. 978-0-19-986058-6 ↩