Per Capita Income

Per capita income is the average income for each person in a particular group. Most commonly, per capita income is computed for various geographic entities, extending from individual ZIP codes to entire nations. The Bureau of Economic Analysis computes per capital income based on total personal income, which includes items like wages, interest, dividends, and government transfers. Per capita income is an important tool for marketers, who can target their advertising campaigns based on the per capita income of individuals in different localities. Per capita income is also commonly used to compare economic conditions among different nations. While useful as a broad gauge of wealth, per capita income statistics have substantial limitations. First, methods for computing economic statistics vary widely by country, and per capita income numbers reflect those differences. Second, per capita income excludes the informal economy, which can be a sizeable portion of overall economic activity. Third, per capita income is measured in exchange rates that often fluctuate substantially. Finally, per capita income numbers do not indicate the level of income equality among a nation's citizenry.