Inequality And Wealth Distribution Questions
The Gini coefficient is a statistical measure used to quantify the level of inequality within a society or a specific population. It is represented by a value between 0 and 1, where 0 indicates perfect equality (everyone has the same income or wealth) and 1 represents extreme inequality (one person 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 x-axis against the cumulative share of income or wealth on the y-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 representation of inequality, allowing for comparisons between different countries, regions, or time periods. It is commonly used by economists, policymakers, and researchers to assess the distribution of wealth or income within a society and to monitor changes in inequality over time.