Q:

How do you calculate per capita income?

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Quick Answer

The U.S. Census Bureau calculates per capita income by dividing a geographic area's total income from the past 12 months by the total population of all ages living in that geographic area. Only income received by people over 15 years old is counted, notes the U.S. Department of Commerce.

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How do you calculate per capita income?
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Full Answer

Excluded from the total income are any amounts received from capital gains, property sales, food stamps, borrowed money, income tax refunds, gifts and lump-sum payments from inheritances or insurance. Per capita income provides an estimation of the average income earned by each person in a certain area. This figure does not provide an accurate picture of the area's quality of life since the calculation does not account for skewed data, according to Investopedia.

The definition of income for the purposes of calculating per capita income includes money income from wages, salary and self-employment; investment income; retirement and other pension income and public assistance.

Per capita income statistics are available for the country as a whole and for smaller geographic areas such as states, towns and cities.

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