Put the capita back in GDP per capita

You may think that this story has nothing to do with you, but you are the whole reason for this story. How you and everyone thinks about a wonky metric, GDP per capita, will shape your quality of life for the next two decades.

- ARMINE YALNIZYAN

Decision-makers in Canada and around the world are abuzz about slowing economic growth, particularly the "in-a-nutshell" measure of progress since the 1980s, GDP per capita. With the exception of the U.S., GDP per capita has stalled or fallen in all advanced economies. Of late, Australia and Canada have seen the worst declines.

The reason you should be worried isn't that GDP per capita is falling, but what the proposed fixes are.

Let's start with: What the heck is GDP per capita?

It is the dollar value of everything bought or sold in an economy, divided by the total number of people who live in that place. In decadesold parlance, it's about the size of the pie, and how big a slice of pie the average person gets.

GDP per capita is an unhelpful metric for guiding policy fixes, for three reasons: It doesn't tell you why GDP per capita is high or low. Most top nations in a global ranking of GDP per capita are tax havens or oil-producing juggernauts, sometimes both.

However the top 20 also include all five Nordic nations and the Netherlands, historically the biggest spenders on social programs. Yes, Canadian GDP per capita is behind the U.S., but we rank 17th out of 193 nations. Is that worth kvetching about? 

■ GDP per capita is an average measure that doesn’t tell you anything about how the economic pie is divided. Averages imply everyone one gets the same slice of pie. In no nation is the economy equally distributed. So say we go all-in on growing the pie; there’s no guarantee you’ll get more.