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GDP per Capita: When should we use it?

April 24, 2026

Introduction

The left chart lists the countries with the highest population. The chart on the right does the same, but with GDP.

You may have noticed that many of the countries with the highest total GDPs tend to have very large populations. GDP is strongly tied to population size. This allows countries like India, which has over a billion people, to rank near the top in terms of GDP, even as a developing country. If we intend to use GDP as a measure of national economic well-being, we need to mitigate the effect of population size first.

How is GDP per capita calculated?

GDP per capita is literally just GDP averaged across a given population size.

Don't make this more complicated than it needs to be.

Who has the highest GDP per capita?

The countries with the highest GDP per capita tend to be pretty small in terms of population size. This includes a handful of city-states throughout Europe and the Caribbean, in addition to Singapore. If total GDP were used instead of GDP per capita, none of these countries would make the top 10.

That said, it's worth noting that many of these are classified as "tax havens", which are countries where it's pretty easy for wealthy foreigners to claim residence and get out of paying taxes. This practice skews GDP per capita, since those wealthy foreigners tend to be positive outliers in their host country.

When do Economists use GDP per Capita?

With the exception of "tax havens" and a few other special cases, GDP per capita provides economists with a clear way to evaluate the average wellbeing within a country. Specific factors we might associate with a high standard of living, such as education and healthcare, tend to be strongly correlated with GDP per capita. This makes it, perhaps, the most widely used measure of development. However, total GDP is still far from useless. In international trade, for instance, total GDP provides a strong summary of a country's total economic power; GDP per capita couldn't do that. We should choose our metric based on what we want to evaluate: if it's the individual, GDP per capita; for the economy as a whole, total GDP.

Sources

World Bank, "Population, total." Accessed on 4/24/2026. https://data.worldbank.org/indicator/SP.POP.TOTL.
World Bank, "GDP (current US$)." Accessed on 4/24/2026. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD.
World Bank, "GDP per capita (current US$)." Accessed on 4/24/2026. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD.

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