Per Capita Income Equation

It is calculated by dividing the area s total income by its total population.

Per capita income equation. For example if the per capita income for a nation rose from 50 000 per. Median income is a more accurate reflection of average americans actual incomes because it accounts for income inequality that per capita or average income can hide. Formula to calculate per capita income. Per capita income is the average amount of money that a particular group of people receives in one year.

To calculate the gross national income per capita you will use the same information used to calculate the gdp per capita in addition to any income that residents have brought in as a result of foreign investments. This calculation gives economists a way of measuring the standard of living or relative prosperity of people in a specific area. In a specified period say during a year usually aiming to determine the average income earned by a person in order to evaluate the standard. Per capita income doesn t reflect inflation in an economy which is the rate at which prices rise over time.

Gdp per capita can be said to be a measure of a nation s economic output which shall account for its population that is the count of the person. Comparisons of national income are also frequently made on the basis of purchasing power parity ppp to adjust for differences in the cost of living in different countries. Per capita income pci or average income measures the average income earned per person in a given area city region country etc in a specified year. Province country city area sector etc.

The formula divides the nation s gross domestic product that is the gdp by its number of people in short the total population of the nation. Firstly determine the nominal gdp of the subject country on the basis of its private consumption gross investment government investment exports and imports as shown below. However this is problematic because gdp per capita is not a measure of personal income. Per capita income can be described as an economic barometer which measures the income earned by an individual under a given set of economic unit say geographic region i e.

You can also determine the gross national income per capita of a country using a similar formula to the one used to get the gdp per capita. The formula for gdp per capita can be derived by using the following steps. Per capita income is national income divided by population size.