Economic Disparities Questions Medium
The Gini coefficient is a statistical measure used to quantify the level of economic inequality within a society. It is named after the Italian statistician Corrado Gini, who developed the concept in 1912. The coefficient ranges from 0 to 1, where 0 represents perfect equality (all individuals have the same income or wealth) and 1 represents maximum inequality (one individual possesses all the income or wealth).
To calculate the Gini coefficient, a Lorenz curve is used. The Lorenz curve plots the cumulative share of the population on the horizontal axis against the cumulative share of income or wealth on the vertical axis. The Gini coefficient is derived by calculating the area between the Lorenz curve and the line of perfect equality, and then dividing it by the total area under the line of perfect equality.
The Gini coefficient provides a numerical value that allows for comparisons of income or wealth distribution across different countries or regions. It is commonly used by economists, policymakers, and social scientists to assess the extent of economic disparities and to monitor changes in inequality over time. A higher Gini coefficient indicates greater inequality, while a lower coefficient suggests a more equal distribution of income or wealth.