Per capita income or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population.
Per capita income is national income/total population.
Per capita income is often used to measure an area's average income. This is used to compare the wealth of one population with those of others. Per capita income is often used to measure a country's standard of living. It is usually expressed in terms of a commonly used international currency such as the euro or United States dollar, and is useful because it is widely known, is easily calculable from readily available gross domestic product (GDP) and population estimates, and produces a useful statistic for comparison of wealth between sovereign territories. This helps to ascertain a country's development status. It is one of the three measures for calculating the Human Development Index of a country.
In the United States, it is defined by the U.S. Census Bureau as the following: "Per capita income is the mean money income received in the past 12 months computed for every man, woman, and child in a geographic area." (Children are counted if they are at least 15 years old.)
Critics claim that per capita income has several weaknesses in measuring prosperity: