Gini coefficient and lorenz curve explained towards data. It shows for the bottom p1% of households, what percentage p2% of the total income they have. Alternatively, the gini coefficient can also be calculated as the half of the relative mean absolute difference. It discusses its characteristics and the link with another popular graphical tool of representing inequality, the lorenz curve. Gini coefficient definition, formula how to calculate. As compared to other countries in figure 1, we see that the u. Bank data, between 1981 and 20, the gini index ranged. The gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality where everyone has the same income and 1 corresponds with perfect inequality where one person has all the incomeand everyone else has no income. Gini coefficient measures for south africa by sex 2006, 2009, 2011 and 2015 40 figure 2. A comparative study of the gini coefficient estimators based on the.
Learn how the world bank group is helping countries with covid19 coronavirus. Measure of the deviation of the distribution of income among individuals or households within a country from a perfectly equal distribution. Hong kongs gini coefficient compared with other economies. Economics the gini index 9 gini coefficient or gini ratio named after corrado gini measure of income inequality horizontal axis percentage of countrys population vertical axis percentage of countrys income a area between line of equality and lorenz curve b area beneath lorenz curve gini index a. A value of 0 represents absolute equality, a value of 100 absolute inequality. A higher gini coefficient represents a more unequal distribution. This way combines a range of techniques used to calculate the approxi. Oct 22, 2019 the gini coefficient is equal to the area between the actual income distribution curve and the line of perfect income equality, scaled to a number between 0 and 100. Gini coefficient measures for south africa 2006, 2009, 2011 and 2015 39 figure 2. For energy resources within the united states, we find that by household, the gini coefficient is 0. Pdf the gini index and measures of inequality researchgate. The econometrics of inequality and poverty chapter 4. Cheon, byung you, chang, jiyeun hwang, gyu seong shin, jin. Gini coefficient measures the inequality of wealth distribution or income inequality in a particular area.
The gini coefficient, which is derived from the lorenz curve, can be used as an indicator of economic development in a country. In the modern world, there are numerous development issues that have a huge weight for the world organizations and countries. It is defined as a it is defined as a ratio with values between 0 and 1. It was developed by the italian statistician corrado gini in 1912.
The average of gini index scores in this map is about 40. Incomes are more equally distributed and fewer people are poor where social spending is high. While a perfect scenario would be that of equality in income distribution, this is not normally the case in most of the areas around the world. Wealth and income inequality are one of these important issues of the global concern which made most of the world countries. In our calculation, the fraction of wealth is the height of the trapezoid, and the bases are fraction of population that is richer than this group and fraction of population that is. Gini index world bank estimate united states from the world bank. The gini coefficient is a single number aimed at measuring the degree of inequality in a distribution. The gini index is a summary statistic that measures how equitably a resource is distributed in a population. Mathematically, the gini coefficient is defined as a ratio of the areas on the lorenz curve diagram see figure 8. From the classical gini index of income inequality to a new zenga.
Poverty trends in south africa statistics south africa. Examples of parametric distributions with such pdfs can be found in. Calculus i introduction to the gini coefficient the gini coefficient or gini index is a commonlyused measure of inequality devised by italian economist corrado gini in 1912. Higher the value of an index, more dispersed is the data. In this assignment, we study income inequality in the united states using the gini coefficient. The gini coefficient is usually a number between 0 and 1 or 0 to 100.
All countries color coded in green have gini index scores less than 40, while those in shades of red have gini index above 40. The gini coefficient is equal to the area between the actual income distribution curve and the line of perfect income equality, scaled to a number between 0 and 100. Gini index world bank estimate world bank, development research group. Gini coefficients of education vinod thomas, yan wang, and xibo fan abstract equal access to education is among the basic human rights and a component of well being. Data are based on primary household survey data obtained from government statistical agencies and world bank country departments. This is a list of countries or dependencies by income inequality metrics, including gini coefficients. In oecd countries in the mid1980s, the gini measure stood at 0. The lorenz curve is a graphical representation of the cumulative income distribution. The gini coefficient also known as the gini index or gini ratio is a measure of differences in income. Extended version of the gini index with different weighting schemes are also discussed. Yet, the educational gaps between various groups in many countries are staggering. The gini coefficient is a commonlyused measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1. Notes on how to compute gini coefficient suppose you are given data like this. The gini project studies the economic and educational drivers and the social, cultural and political impacts of increasing inequality with novel contributions on the measurement of income, wealth and education inequality.
Pdf gini coefficient as a life table function evgeny. Higher gini index for a nation means more income difference between its people. Proportion of people living below 50% of median income per capita by sex 2006, 2009, 2011 and 2015 41. The gini index is a complex inequality measure2 and, as with many inequality measures, it is a synthetic index. If a 0, the gini coefficient becomes 0, which means perfect equality, whereas if b 0, the gini coefficient becomes 1, which means complete inequality. The lowest 10% of earners make 2% of all wages the next 40% of earners make 18% of all wages the next 40% of earners make 30% of all wages the highest 10% of earners make 50% of all wages. The gini coefficient is defined using the lorenz function. The small sample variance properties of the gini coefficient are not known, and large sample approximations to the variance of the coefficient are poor mills and zandvakili, 1997.
The gini coefficient is derived from the lorenz curve, which sorts the population from poorest to richest, and shows the cumulative proportion. Therefore, its characteristic is that of giving summary. Lorenz curves, the gini coefficient and parametric distributions. Income distribution function, pdfx, gini coefficient. In a group of 24, discuss and answer the following questions on lorenz curves and gini coefficients. Summary this tool addresses the most popular inequality index, the gini index.
This statistic presents data on the degree of inequality in wealth distribution based on the gini coefficient in nicaragua between 2000 and 2017. The gini coefficient is derived from the lorenz curve, which sorts the population from poorest to richest, and shows the cumulative proportion of the population on. It is most often used in economics to measure how far a countrys wealth or income distribution deviates from a totally equal distribution. The gini coefficient can vary from 0 perfect equality to 1 perfect inequality. The gini index or gini coefficient is a statistical measure of distribution developed by the italian statistician corrado gini in 1912. In economics, the gini coefficient sometimes called the gini index or gini ratio, is a measure of. Data and research on social and welfare issues including families and children, gender equality, gini coefficient, wellbeing, poverty reduction, human capital and inequality. Another approach to variance estimation of the gini index is the linearization method. If income is as unequally distributed as possible that is, if a single hh receives all hh income in the country then the gini coefficient will be one. In addition to a selfcontained presentation of the gini. This paper presents a toolkit for measuring and analyzing interindividual inequality in length of life by gini coefficient. The gini index is one of the most commonly used indicators of income inequality, and its computation and interpretation require a thorough understanding of various quantitative literacy concepts.
The gini coefficient is a measure of inequality of a distribution. Apr 05, 2019 this statistic presents data on the degree of inequality in wealth distribution based on the gini coefficient in nicaragua between 2000 and 2017. Pdf the gini index is a summary statistic that measures how equitably a resource is distributed in a population. The gini coefficient measures the degree of income equality in a population. Mar 06, 2019 the gini coefficient or gini index measures the inequality among the values of a variable. Graphing a lorenz curve and calculating the gini coefficient 1 lorenz curves and gini coefficient answers directions. In particular, the gini index has been widely used by economists and.
You will need internet access in order to answer question 5. If income is perfectly equally distributed, then the value of the gini coefficient will be zero. Lorenz curve coincides with the diagonal in figure 2 and 1 perfect inequality. Gini coefficient simple english wikipedia, the free. A popular measure of inequality is the gini coefficient, which ranges from 0 perfect equality to 1 perfect inequality, but is typically in the range of 0. The gini coefficients main advantage is that it is a measure of inequality by means of a ratio analysis, rather than a variable unrepresentative of most of the population, such as per capita income or gross domestic product.
90 302 109 1526 966 71 550 684 22 1390 859 1193 430 938 786 757 1294 197 451 1215 1540 1322 281 953 557 1036 165 512 384 418 1046 969 202 1 85 1012