How do you read a Lorenz curve?
If everyone earned the same, the bottom 20% would hold 20% of income and the bottom 50% would hold 50%—a 45-degree line of perfect equality. In reality the bottom half may hold far less, so the curve bows below the diagonal. The deeper the bow, the greater the inequality (Lorenz, 1905).
How does it relate to the Gini coefficient?
The Gini coefficient equals the area between the line of equality and the Lorenz curve divided by the whole triangle under the line. It ranges from 0 (perfect equality) to 1 (one person has everything). Overlaying pre-tax and post-tax curves shows how much taxes and transfers reduce inequality. When two curves cross, though, you can't rank them without more detail.
FAQ
- Can it be used for things other than income?
- Yes—wealth, land, market share, even citations.
- What if two Lorenz curves cross?
- They may share a Gini but differ in shape, so look at quintile shares too.
Sources reviewed: 2026-10-25
References
- Lorenz, M. O. (1905). Methods of measuring the concentration of wealth. Publications of the American Statistical Association, 9(70), 209–219.