Q:

How do you calculate per capita income?

A:

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.

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.


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