What is the Gini coefficient?
Proposed by Italian statistician Corrado Gini in 1912, the Gini coefficient measures how unequally income or wealth is distributed, from 0 (perfect equality) to 1 (perfect inequality). It is the most widely used inequality indicator in national statistics and OECD and World Bank comparisons.
📌 At a glance
- Proposed by
- Corrado Gini (1912)
- Based on
- Lorenz curve (Lorenz, 1905)
- Range
- 0 to 1 (often shown as 0–100)
- Use
- Comparing distributions across countries and time
The Lorenz curve
Rank people from poorest to richest and plot the cumulative share of population against the cumulative share of income. The Gini coefficient is the area between the line of equality and the Lorenz curve, divided by the total area under the line of equality.
Cautions
- Compare market income vs disposable income Gini to see the effect of taxes and transfers.
- Different distributions can share the same Gini.
- Complementary measures include the S80/S20 ratio and the Palma ratio.
Frequently asked questions
- What does the Gini coefficient measure?
- The degree of inequality in a distribution of income or wealth, from 0 to 1.
- What does a higher Gini mean?
- Greater inequality: income is more concentrated among fewer people.
References
- Gini, C. (1912). Variabilità e mutabilità. Tipografia di Paolo Cuppini.
- Lorenz, M. O. (1905). Methods of measuring the concentration of wealth. Publications of the American Statistical Association, 9(70), 209–219.