is it possible to have a high per capita income in a country where many people are poor ? how?explain ?
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What Is Per Capita Income?
Per capita income is a measure of the amount of money earned per person in a nation or geographic region. Per capita income can be used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population. Per capita income for a nation is calculated by dividing the country's national income by its population.
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Income Per Capita
Understanding Per Capita Income
Per capita income counts each man, woman, and child, even newborn babies, as a member of the population. This stands in contrast to other common measurements of an area's prosperity, such as household income, which counts all people residing under one roof as a household, and family income, which counts as a family those related by birth, marriage, or adoption who live under the same roof.
Per Capita Income in the U.S.
The United States Census Bureau takes a survey of income per capita every ten years and revises its estimates every September. The Census takes the total income for the previous year for everyone 15 years and older and calculates the median average of the data. The census includes earned income (including wages, salaries, self-employment income), interest income, dividends as well as income from estates and trusts, and government transfers (Social Security, public assistance, welfare, survivor and disability benefits). Not included are employer-paid healthcare, money borrowed, insurance payments, gifts, food stamps, public housing, capital gains, medical care, or tax refunds.
According to 2018 Census data, the national per capita income for the year was $32,621 in 2018 dollars as shown in the table below. We can see, from the U.S. Census Bureau, that the per capita income is lower than the median household income of $60,293, which is calculated by grouping the number of people in each household.1
Per Capita Income U.S.
Per Capita Income U.S. Investopedia
Each metric has its advantages. Per capita income is helpful when analyzing a large number of people, such as the population of the United States, which stands at more than 300 million.1 However, median household income is helpful when determining the income of families in the U.S. and in particular, how many families are in poverty.
KEY TAKEAWAYS
Per capita income is a measure of the amount of money earned per person in a nation or geographic region.
Per capita income helps determine the average per-person income to evaluate the standard of living for a population.
Per capita income as a metric has limitations that include its inability to account for inflation, income disparity, poverty, wealth, or savings.
Uses of Per Capita Income
Perhaps the most common use of income per capita is to ascertain an area's wealth or lack of wealth. For example, income per capita is one metric the U.S. Bureau of Economic Analysis (BEA) uses to rank the wealthiest counties in the United States, the other being median household income.2
Per capita income is also useful in assessing an area's affordability. It can be used in conjunction with data on real estate prices, for instance, to help determine if average homes are out of reach for the average family. Notoriously expensive areas such as Manhattan and San Francisco maintain extremely high ratios of average home price to income per capita.
Businesses can also use per capita income when considered opening a store in a town or region. If a town's population has a high per capita income, the company might have a better chance at generating revenue from selling their goods since the people would have more spending money versus a town with a low per capita income.
Limitations of Per Capita Income
Although per capita income is a popular metric, it does have some limitations.
Livings Standards
Since per capita income uses the overall income of a population and divides it by the total number of people, it doesn't always provide an accurate representation of the standard of living. In other words, the data can be skewed, whereby it doesn't account for income inequality.
Explanation:
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