Glossary term
Per Capita Income: Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
Per capita income is the national income of a country divided by its population. It gives the average income per person in a year. Because it is a simple average, it says nothing about how income is shared between rich and poor, so it can hide wide inequality.
In more detail
Per capita income lets economists compare living standards across countries and over time, by dividing national income by population. Because it is an average, a few very rich people can lift it without lifting anyone else. It is more informative when read with measures of poverty and inequality.
Example
If a small economy has a national income of ₹3,60,000 crore and a population of 30 crore, its per capita income is ₹12,000. Some people earn far more and some far less.
Key points
- Per capita income = national income ÷ population.
- It is an arithmetic mean and is affected by very high incomes.
- It does not show how income is distributed.
Common mistake
Reading it as the income of a typical person. It is an average, not a median.
Related terms
Where it is explained
This term is explained in Class 11 Statistics Chapter 1: Introduction.