# GDP per inhabitant vs. average salary **URL:** \ **Category:** Factual Questions\ **Created:** [August 5, 2003, 7:30pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182 "2003-08-05T19:30:04Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![zeenard](https://avatars.discourse-cdn.com/v4/letter/z/85e7bf/32.png) [@zeenard](https://boards.straightdope.com/u/zeenard)\ **Post date:** [August 5, 2003, 7:30pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/1 "2003-08-05T19:30:04Z")
I recently got interested in business and economy. Of course, I still don’t know much about it. My friend and I were arguing the other day about some notions. His point was: «The GDP per inhabitant of State A represents 82% of the GDP per inhabitant of State B. However, the average salary of State A is only 8% lower. Logically, it should be 18% lower. So people in State A are much wealthier than they should be». ``` State A State B ``` GDP per inhabitant 144k 175k (in millions) Averrage salary 26,2k 29k I don’t know why, (and I don’t have any argument to defend my point) but this seems wrong to me. I don’t think that you can compare two different things such as the GDP per inhabitant and the average salary. What do you guys think? Can someone help me? Thank you very much ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 5, 2003, 7:37pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/2 "2003-08-05T19:37:58Z")
Are these average salaries before or after state taxes? What is the difference in unemployment rates between the two states? Unemployed persons would be counted in the GDP per capita but not the average salary. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [August 5, 2003, 8:34pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/3 "2003-08-05T20:34:01Z")
There is not a one to one correlation of per capita income to per capita GDP. Neither metric are an absolute measure of relative wealth however there is a strong correlation of high GDP to other factors like healthcare, education, and other standard of living indicators. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [August 5, 2003, 8:46pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/4 "2003-08-05T20:46:06Z")
What you’re looking at is part of “productivity.” Maximizing GDP per dollar spent is the goal of much economic policy. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [August 5, 2003, 9:17pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/5 "2003-08-05T21:17:36Z")
The GDP of a state measures the market value of all goods and services produced within the state. Not all of the value of such production accrues to workers; some accrues to the capitalists who supply land, machinery, and working capital. Thus State B probably has more capital-intensive industry than State A. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [August 5, 2003, 11:07pm UTC](https://boards.straightdope.com/t/gdp-per-inhabitant-vs-average-salary/193182/6 "2003-08-05T23:07:32Z")
As I think about this some more, there is a more fundamental issue here. Average wages are measured _per year of work_. Per capita GDP is measured _per person per year_, whether the person works or not. State B may simply have more non-wage earners (children, housewives, elderly, unemployed, etc.) than State A. If _total wages_ bore the same relationship to _total GDP_ as above, then you would look at the labor-vs.-capital split I mentioned previously.