Which is a better way to measure annual income per head, Nominal or PPP?

Question by LaoWaiSuomi: Which is a better way to measure annual income per head, Nominal or PPP? I am looking at an article on Wikipedia, and it compares the different provinces of China to each other by measuring Nominal GDP and PPP. I notice the PPP is very high in comparison, so I am curious as to which figure gives a more accurate assumption of the average income per person. Thanks!

Best answer:

Answer by Toby A
Nominal GDP just looks at 'raw' numbers, without any conversion/analysis for individual country situations. PPP on the other hand takes into consideration individual country situations. So the nominal GDP is relatively low in this case, but PPP is high, which means that relative living standards/incomes are higher. Goods are cheaper in China, so you 'get more out' of a GDP number than you would with the same value in the US.

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