Gini Coefficient
AdvancedThe Gini coefficient is a measure of inequality in the distribution of income or wealth within a population, ranging from 0, meaning perfect equality, to 1, meaning one person has everything.
The Gini coefficient, developed by Italian statistician Corrado Gini in the early twentieth century, is one of the most widely used measures of inequality.
It is based on the Lorenz curve, which plots the cumulative share of income received by the population, ordered from poorest to richest. In a perfectly equal society, the Lorenz curve would be a straight diagonal line. The Gini coefficient measures how far the actual curve falls below that line.
For example, a country with a Gini coefficient of 0.25 has relatively equal incomes, while one with a coefficient of 0.50 or higher has high inequality. It is sometimes expressed on a scale of 0 to 100.
The Gini coefficient is convenient for comparing countries and tracking change over time, but it has limitations. Very different distributions can produce the same Gini coefficient, and it is more sensitive to changes in the middle of the distribution than at the extremes. Results also depend on whether income is measured before or after taxes and benefits.
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