How to Calculate Per Capita Consumption

Image Credit: designer491/iStock/GettyImages

Per capita consumption is the average use of a product, service or other item per person. You can calculate the per capita consumption of a particular food, for example, if you are interested in investing in a commodity. You can calculate per capita consumption as it relates to a country's economic activity, such as Gross Domestic Product. You can make a quick calculation to help you make comparisons by year to see if something you're researching is trending upward or downward.

Advertisement

Read More​: How to Calculate GDP Per Capita

Video of the Day

What Is Consumption?

"Consumption" comes from the word "consume," which means to use. This is also where the word "consumer" comes from. You can consume a piece of food by eating it or a type of beverage by drinking it. The electricity generation industry consumes coal and natural gas. The more public, business and government sectors consume, the more they spend. This economic consumption drives economies and creates their GDP.

Advertisement

Economists not only look at consumption per sector (consumer, business or government), but they also look at it by industry (e.g., tech, auto, food, retail), household and individuals. Economists look at households because members of a household share many goods and services, such as washing machines, TVs and furniture. Measuring incomes and economic consumption by household are often easier to track and can provide more stable numbers to gauge the future performance of an industry.

Read More​: How to Calculate Autonomous Consumption

Advertisement

What Does Per Capita Mean?

"Per capita," as it relates to economic consumption, refers to one person. It comes from the Latin "per head." The main use of per capita calculations in economics is to determine changes in income and GDP. You will often read or hear about "per capita income" or "per capita GDP" as reporters or experts discuss the major trends in an economy.

When it comes to consumption, you can find per capita numbers for many goods and services. For example, per capita consumption of fresh potatoes in the U.S. in 2020 was 30.6 pounds per person. Using industry research, you'll find that per capita consumption of potatoes in the U.S. has declined by about 17 pounds per person since 2000. If you are thinking of investing in a potato farm long-term, you might consider otherwise based on this economic consumption measure and trend.

Advertisement

Read More​: Investing In Your 30s

Calculating Per Capita Consumption

You can calculate overall per capita consumption using a country's GDP figure and its population. In 2020, U.S. GDP was $20,936.60 billion. The U.S. population was 331,002,651. So, $20,936.60 billion / 331,002,651 = $63,333. According to World Bank calculations, the figure was $63,543.58.

You can calculate per capita consumption in a particular industry or for a particular good or service by dividing it by a country's population. For potatoes, for example, you'd divide the total consumption of potatoes by the U.S. population or by U.S. households.

Advertisement

references