Per Capita

Published Oct 25, 2023

Definition of Per Capita

Per Capita is a Latin term that translates to “per head” or “for each person.” It is used to describe a measurement or statistic that is calculated by dividing the total amount of a particular variable by the population size. Essentially, it provides an average value for each individual in a population.

Example

To illustrate the concept of per capita, let’s consider a country’s GDP (Gross Domestic Product). GDP measures the total value of all goods and services produced within a country’s borders in a specific period. If we want to determine the GDP per capita, we divide the total GDP by the population size of the country.

For example, let’s say Country A has a GDP of $1 billion and a population of 10 million people. To find the GDP per capita, we divide $1 billion by 10 million, resulting in a GDP per capita of $100.

This calculation allows us to understand the economic output on an individual basis, providing insight into the average wealth or income levels of the population.

Why Per Capita Matters

Per Capita measurements are essential for understanding and comparing economic indicators across different populations. By averaging values on an individual basis, we can assess the relative prosperity or well-being of a population. Per Capita measurements are commonly used to analyze income levels, economic growth, healthcare spending, and various other factors.

These measurements help policymakers, economists, and researchers to identify trends, make comparisons between different regions or countries, and develop strategies to address disparities or improve the standard of living.