|
 Gini-coefficient of
national income
distribution around the
world (dark green:
<0.25, red: >0.60)
US: Central Intelligence
Agency |
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The
Gini coefficient is a
measure of statistical
dispersion developed by the
Italian statistician Corrado
Gini and published in his 1912
paper "Variability and
Mutability" (Italian:
Variabilità e mutabilità).
The
Gini coefficient is a measure of
the inequality of a
distribution, a value of 0
expressing total equality and a
value of 1 maximal inequality.
It has found application in the
study of inequalities in
disciplines as diverse as
economics, health science,
ecology, chemistry and
engineering.
It
is commonly used as a measure of
inequality of
income or
wealth. Worldwide, Gini
coefficients for income range
from approximately 0.25
(Denmark) to 0.70 (Namibia)
although not every country has
been assessed.
The
Gini coefficient is usually
defined mathematically based on
the Lorenz curve, which plots
the proportion of the total
income of the population (y
axis) that is cumulatively
earned by the bottom x% of the
population (see diagram). The
line at 45 degrees thus
represents perfect equality of
incomes. The Gini coefficient
can then be thought of as the
ratio of the area that lies
between the line of equality and
the Lorenz curve (marked 'A' in
the diagram) over the total area
under the line of equality
(marked 'A' and 'B' in the
diagram); i.e., G=A/(A+B).
The
Gini coefficient can range from
0 to 1; it is sometimes
multiplied by 100 to range
between 0 and 100. A low Gini
coefficient indicates a more
equal distribution, with 0
corresponding to complete
equality, while higher Gini
coefficients indicate more
unequal distribution, with 1
corresponding to complete
inequality. To be validly
computed, no negative goods can
be distributed. Thus, if the
Gini coefficient is being used
to describe household income
inequality, then no household
can have a negative income. When
used as a measure of income
inequality, the most unequal
society will be one in which a
single person receives 100% of
the total income and the
remaining people receive none
(G=1); and the most equal
society will be one in which
every person receives the same
percentage of the total income
(G=0).
Some
find it more intuitive (and it
is mathematically equivalent) to
think of the Gini coefficient as
half of the Relative mean
difference. The mean difference
is the average absolute
difference between two items
selected randomly from a
population, and the relative
mean difference is the mean
difference divided by the
average, to normalize for scale
(Source: wikipedia.com)
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