# Splitting GDP between population

When looking at the average incomes in a country it is necessary to distinguish between mean income and median income. Mean income tends to be distorted by high earners, so typically median income is used. GDP covers more than individual incomes, including services provided by the state, for example. To look at GDP on an individual level, GDP per capita is used, which seems to suffer from the same problems as mean income. Has anyone devised a way of splitting GDP among individuals to give a 'median' GDP figure for a country.

GDP data are not reported on individual level so that is not directly possible (at least not without going through the expense of collecting such data).

However, output is equal to income (see Mankiw's Macroeconomics pp 47-77). Consequently, if you want to know median output just look at gross median income, they are equal in reality since the value of your income is value of your output. Due to statistical discrepancy, slight statistical methodological differences and measurement error they might be some discrepancy between situation where per-person output would be observable, but aside of that they should be equal.

PS:

Also, this statement:

GDP covers more than individual incomes, including services provided by the state, for example.

is not correct.

GDP can be measured by various ways such as income or spending approach. GDP is by definition sum of all individual incomes or sum of all spending (as these have to be equal), so for closed economy (I use closed economy to save time, the point holds for open one as well):

$$i+π+w+r=Y=C+I+G$$

where $$i$$ is all interest income, $$\pi$$ all income from profits, $$w$$ all income from wages, and $$r$$ all income from rent. As you can see this must be equal to all consumption, investment and government spending. So GDP does not measure more than you can get from individual income statistics (at least from the gross one which are the ones often/typically reported).

• But I get services from the government (infrastructure, security, education etc.), the value of which are not included in my reported income? Aug 21, 2021 at 11:51
• @Giskard but that part of output is captured by taxes you pay, and for GDP transfers do not matter so using median gross income as a proxy for median GDP is completely reasonable.
– 1muflon1
Aug 21, 2021 at 11:57
• @Giskard also note GDP can be calculated by income approach, so GDP is just sum of all individual gross incomes, sure individual income statistics does not use the same methodology as GDP and might measure it differently - I mentioned all these caveats, but median income should capture median GDP + error
– 1muflon1
Aug 21, 2021 at 12:01
• If you make the error large enough... surely redistribution affects the median. Aug 21, 2021 at 12:01
• @Giskard sorry, I read it but I just misunderstood it, my apologies
– 1muflon1
Aug 21, 2021 at 12:29