Per capita personal income is a key economic indicator for understanding the financial demographics of a region. In conjunction with median income, per capita personal income is used to determine the wealth of a given area. Additionally, it can be compared with real estate prices to determine the affordability of a region.
Louisville currently ranks 11th among its peer cities in personal income per capita, with a value of $46,457. Personal income per capita is defined by the Federal Reserve as the amount of money earned per person in a certain area.
On this metric, Louisville is at the bottom of its peer group according to a natural breaks algorithm. Cities in green are those that outperform their peers, cities in yellow represent the middle cluster, and those in red are a group that lags behind its peers on this indicator.
Per capita personal income has been steadily increasing in Louisville since 2005. In comparison to its peer cities, Louisville’s per capita personal income has grown at relatively the same rate. As a result, Louisville’s per capita personal income has remained below its peer city average despite its steady improvement.
For each indicator, Greater Louisville Project assigns cities into one of three groups (high-performing, middle-of-the-pack, and low-performing) based on how they compare to other cities. The assignment is based on how cities naturally cluster on that indicator. Sometimes, the differences between cities are very small, and the difference between a city ranked 5th and 6th could simply be a matter of the sampling error that arises from using survey data. Thus, rather than always make a division that declares the top 5 to be the top tier, we use a natural breaks algorithm to look for a cluster of cities that is outperforming the rest, a cluster that is about average, and a cluster that is lagging. This clustering gives us a better indication of where Louisville is thriving and where Louisville has room to learn from cities that are doing better.
Z-scores (or standardization) is a way to combine data with different units of measurement into a single index. The z-score is a measure of how far away a city (or census tract, etc.) is from the average city. In order to be comparable across different units of measurement, the z-score is the distance from the mean measured in standard deviations (e.g. if Louisville has a z-score of 1 it means Louisville is 1 standard deviation above the mean of its peer cities).
Data from the Robert Wood Johnson Foundation's County Health Rankings use z-scores and all z-scores are relative to the mean of Louisville's peer cities. (On the County Health Rankings site z-scores are relative to all the counties in each state - thus z-scores reported by GLP will be different, because we are using a different reference group). The Greater Louisville Project also uses z-scores in our multidimensional poverty index, which compares each census tract to the mean of all census tracts in Louisville.
