Per Capita Income As A Measure of Prosperity
Per capita income is often used as average income, a measure of the wealth of the population of a nation, particularly in comparison to other nations. 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, easily calculated from readily-available GDP and population estimates, and produces a useful statistic for comparison.
Per capita income has several weaknesses as a measurement of prosperity:
- Comparisons of per capita income over time need to take into account changes in prices. Without using measures of income adjusted for inflation, they will tend to overstate the effects of economic growth.
- International comparisons can be distorted by differences in the costs of living between countries that aren't reflected in exchange rates. Where the objective of the comparison is to look at differences in living standards between countries, using a measure of per capita income adjusted for differences in purchasing power parity more accurately reflects the differences in what people are actually able to buy with their money.
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Famous quotes containing the words income, measure and/or prosperity:
“We commonly say that the rich man can speak the truth, can afford honesty, can afford independence of opinion and action;—and that is the theory of nobility. But it is the rich man in a true sense, that is to say, not the man of large income and large expenditure, but solely the man whose outlay is less than his income and is steadily kept so.”
—Ralph Waldo Emerson (1803–1882)
“I am not the measure of creation.
This is beyond me, this fish.
His God stands outside my God.”
—D.H. (David Herbert)
“The weather and my mood have little connection. I have my foggy and my fine days within me; my prosperity or misfortune has little to do with the matter.”
—Blaise Pascal (1623–1662)