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


See also[]

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