More specifically I’m referring to the US: The Median income is $31,000 but the GDP per capita is $65,000. These are 2 measures of how wealthy an average citizen is, yet they are drastically different numbers. Could someone explain?
In: Economics
There are two reasons for this.
First, GDP and income are different things. Gross Domestic Product is the value of products and services produced in a country. Income is the income people get. There’s gap between the ‘sale’ value of production and people’s income as a result of things like money saved and invested by corporations and governments, going overseas and so-on.
Second, one is a mean and the other a median. If you worked out the mean income it would be higher than the median. That’s because the lower 50% of incomes range from $0-31,000, but the upper 50% go from $31,000 to tens of millions of dollars, or even more.
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