Economics Welfare Economics Questions
The Gini coefficient is a measure of income inequality within a society. It is represented by a number between 0 and 1, where 0 indicates perfect equality (everyone has the same income) and 1 indicates maximum inequality (one person has all the income). The coefficient is calculated by plotting the cumulative share of income received by the population against the cumulative share of the population, and then measuring the area between the line of perfect equality and the actual income distribution curve. A higher Gini coefficient implies greater income inequality, while a lower coefficient suggests a more equal distribution of income.