Top 10 Countries With the Highest Incomes
One measure of a country's wealth is its disposable income per capita, which refers to the income that is available for spending and saving after taxes are deducted. In 2021, the United States had the highest disposable income per capita at $62,334, followed by other countries such as Luxembourg, Australia, Germany, and Switzerland. In contrast, France had the smallest amount of per capita disposable income among the top 10 countries, with only $39,862.
Diverse methods exist for evaluating a nation's economic well-being. In the subsequent section, there is a ranking of the ten countries with the most substantial disposable income per capita. This metric pertains to the funds remaining at an individual's disposal once they have settled their tax obligations.
Understanding Per Capita Disposable Income
Per capita disposable income signifies the residual income individuals retain after deducting income taxes from their gross earnings. The term "per capita" simply denotes the average per person. Consequently, a nation's per capita disposable income is computed by aggregating the entire gross income within the country, deducting tax obligations, and dividing the resultant total by the nation's population.
Per capita monetary measures can encompass income per capita, money supply per capita, gross domestic product (GDP) per capita, or even net worth per capita. Income per capita may refer to discretionary income per capita or per capita disposable income.
The most recent disposable income per capita figures for 2021 have been sourced from the Organisation for Economic Co-Operation and Development (OECD). These figures, as specified by the OECD, represent the gross household-adjusted disposable income per capita and are denominated in U.S. dollars. Population data has been acquired from the World Bank, while the gross domestic product (GDP) figures for 2022 are sourced from the OECD.
Top 10 Countries by Disposable Income per Capita
- Disposable income per capita: $62,334.17
- Population: 339.9 million
- Gross domestic product: $25.46 trillion
- Leading sectors: Financial services, professional and business services, manufacturing, healthcare.
- Disposable income per capita: $51,465.35
- Population: 655,000
- Gross domestic product: $93.96 billion (300 times as small as in the US)
- Key contributor: Banking, global financial center.
- Disposable income per capita: $45,052.30
- Population: 26.4 million
- Gross domestic product: $1.78 trillion (the 13th largest economy in the world in 2021)
- Major driver: Mining, positive trade balance.
- Disposable income per capita: $44,443.73 (estimate)
- Population: 83.3 million
- Gross domestic product: $5.37 trillion
- Notable exports: Cars, chemicals.
- Disposable income per capita: $44,406.87 (estimate)
- Population: 8.7 million
- Gross domestic product: $723.52 billion
- Key sectors: Pharmaceuticals, gold, watches, jewelry, tourism.
- Disposable income per capita: $43,850.82
- Population: 5.4 million
- Gross domestic product: $518.56 billion
- Economic focus: Oil, fisheries, metals.
- Disposable income per capita: $41,858.57
- Population: 8.9 million
- Gross domestic product: $621.66 billion
- Success factors: Over time, the country's move toward privatization, meaning less regulation, has positively impacted its economy.
- Economic growth: Energy industry, renewable energy.
8. The Netherlands
- Disposable income per capita: $41,256.01 (estimate)
- Population: 17.5 million
- Gross domestic product: $1.25 trillion (ranked as the 17th largest world economy per GDP in 2021)
- Success factors: Natural gas discoveries, refined petroleum exports.
- Disposable income per capita: $40,778.80 (estimate)
- Population: 11.6 million
- Gross domestic product: $769.61 billion
- Notable exports: Vehicles, medicine.
- Disposable income per capita: $39,862.61 (estimate)
- Population: 64.7 million
- Gross domestic product: $3.81 trillion (the 7th-ranked economy in 2021)
- Major exports: Chemical products, motor vehicles, machinery, food, wine, planes, helicopters, beauty products, perfume.
Driving Factors for Higher Average Incomes
The elevation of average incomes is driven by several key factors.
Wage Increases and Tax Reduction
Enhanced disposable income hinges on higher wages and reduced tax burdens. These measures have a direct impact on boosting disposable income.
Per capita disposable income can increase when the population is reduced while maintaining the same income level. However, this demographic shift is generally challenging to achieve, given the global population growth trend.
A rise in income per capita correlates with an increased aggregate of work hours. Transitioning part-time workers to full-time employment contributes to individual income growth and promotes overall employment rates.
Government Investment and Policies
Strategic investments in technology and resource allocation can optimize efficiency, leading to higher income potential. Government expenditures on infrastructure, defense, and the implementation of tax programs and subsidies also play a role in income augmentation.
A more educated workforce has the potential to command higher incomes. Individuals with advanced skills and the ability to streamline processes contribute to improved pay rates, ultimately driving income growth.
Distinguishing Between Disposable and Discretionary Income
Disposable income represents an individual's gross income after tax deductions, while discretionary income encompasses gross income after both tax payments and fixed expenses, such as mortgage, food, insurance, etc., have been subtracted.
The countries leading in disposable income per capita do not necessarily boast the largest populations or GDPs. While the United States, with a population exceeding 339 million and a GDP surpassing $25 trillion, claims the top spot in income rankings, smaller nations like Luxembourg and Norway, with their modest populations (655,000 and 5.4 million, respectively) and comparatively smaller GDPs ($94 billion and $518 billion, respectively), secure the second and sixth positions among the top ten.