The gini index measures the area between the lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Formulated by the italian statistician gini gin 21, the gini coefficient is a summary statistic of the lorenz curve and a commonly used measure of inequality. Gini coefficient of inequality the most widely used single measure of inequality is the gini coefficient. It discusses its characteristics and the link with another popular graphical tool of representing inequality, the lorenz curve. Data are based on primary household survey data obtained from government statistical agencies and world bank country departments.
A score of 1 would represent complete inequality, i. In the united states, for example, the gini coefficient takes a. Share of aggregate income received by each fifth and top 5 percent of families. Data are based on primary household survey data obtained from government statistical. Like the relative mean difference, there does not exist a sample statistic that is in general an unbiased estimator of the population gini coefficient. Figures for the early 1990s generally refer to 1993, whereas figures for the late 2000s generally refer to 2008. This statistic represents the 20 countries with the greatest income distribution equality between 2010 and 2017 based on the gini index. Mean income received by each fifth and top 5 percent of families. The uk has the 7th most unequal incomes of 30 countries in the developed world, but is about average in terms of wealth inequality. In economics, the gini coefficient, sometimes called the gini index or gini ratio, is a measure of statistical dispersion intended to represent the income or wealth distribution of a nations residents, and is the most commonly used measurement of inequality. The gini coefficient is a globally used measure of income inequality in countries the. The gini coefficient is a measure of inequality of incomes or sometimes wealth across individuals a score of 0 on the gini coefficient represents complete equality, i.
The gini coefficient or index is a prominent measure of income inequality. The only other countries in our sample that record a level of inequality as high as brazil are bolivia and swaziland. Gini coefficient definition, calculation and indias. The gini coefficient is a long and fairly complicated statistical equation, created by an italian mathematician named corrado gini in the early twentieth century. The gini coefficient is the most commonly used measure of the amount of income inequality in a society in the chart above, we see that the amount of income inequality among individual americans increased in the years from 1947 to 1960. Brazil continues to suffer from widespread poverty. Gini index world bank estimate world bank, development research group. United kingdom the chartbook of economic inequality.
The gini coefficient is a ratio between 0 and 1, where 0 implies that each. The worldwide gini coefficient has been consistently dropping in the period 19702006. In economics, the gini coefficient, also known as the gini index or gini ratio, is a measure of statistical dispersion intended to represent the income or wealth distribution of a nations residents, and is the most commonly used measurement of inequality. The gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality where everyone has the same income and 1 corresponds with perfect inequality where one person has all the income, and everyone else has zero income. Gini coefficients are based on equivalised incomes for oecd countries and per capita. A gini coefficient of 0 represents perfect equality where everyone earns the same income, and 1 represents complete inequality where all the countrys. A second look at measuring inequality in south africa. This corresponds to the period of time following the end of world war 2s wage and price controls on 9 november 1946, which had prevented americans.
Lessons from brazils war on poverty fivethirtyeight. Pdf more than a century ago, corrado gini proposed his wellknown concentration index for measuring the degree of inequality in the distribution of. If a 0, the gini coefficient becomes 0, which means perfect equality, whereas if b 0, the gini coefficient becomes 1, which means complete inequality. Summary this tool addresses the most popular inequality index, the gini index. A value of 0 represents absolute equality, a value of 100 absolute inequality. Introduction the gini coefficient sometimes expressed as a gini ratio or a normalized gini index is a measure of statistical dispersion intended to represent the income or wealth distribution of a nations residents, and is the most commonly used measure of inequality of income or wealth. A gini index of 0 would imply perfect income equality, while an index of 1 would imply complete income disparity. While the top fifth have nearly 50% of the countrys income and 60% of the countrys wealth, the bottom fifth have only 4% of the income and only 1% of the wealth. It is defined as a ratio with values between 0 and 1. The gini coefficient was proposed by gini as a measure of inequality of income or wealth. The gini coefficient takes a value of between 0 and 1, where the higher the value, the higher is inequality.
Gini coefficient measures the inequality of wealth distribution or income inequality in a particular area. This statistic depicts data on the degree of inequality in wealth distribution based on the gini coefficient in brazil between 2000 and 2017. The gini coefficient was first defined in a 1912 paper by the italian economist corrado gini 18841965. The higher the coefficient is, the greater the income gap in a society. Inequality and economic development in brazil isbn. Measure of the deviation of the distribution of income among individuals or households within a country from a perfectly equal distribution.
For oecd countries, in the late 20th century, considering the effect of taxes and transfer payments, the income gini coefficient ranged between 0. It leverages a scale of 0 to 1 to derive deviation from perfect income equality. Gini ratios of families by race and hispanic origin of householder. Brazils income inequality is very high and persistent over time, and it has deep historic and regional roots. Confidence intervals for the population gini coefficient can be calculated using bootstrap techniques. The gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality where everyone has the same income and 1 corresponds with perfect inequality where one person has all the incomeand everyone else has no income. Rongxing guo, in understanding the chinese economies, 20. In 2018, according to the gini coefficient, household income distribution in the united states was 0. Extended version of the gini index with different weighting schemes are also discussed. Thus a gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality.
A second look at measuring inequality in south africa 3 z z z i g. The gini coefficient is calculated as the ratio of the area that lies between the straight 45degree line and the lorenz curve marked area a in figure 1. Bureau of the census, income, poverty, and health insurance coverage in the united states. Income inequality at record high by barry mason 4 june 2009 last month the government quietly published the latest measure of income inequality, the gini coefficient, for the uk. Figure 1 shows income inequality in the uk as measured by the gini coefficient. Today, it is most commonly used to measure inequality in various aspects, but it most frequently cited by. Based on lewis dualsector model, this paper explores a new mathematical model to evaluate income inequality between urban and rural residents quantitatively. This is a list of countries or dependencies by income inequality metrics, including gini coefficients. Estimation of the gini coefficient for the lognormal. Gini coefficient of equivalised modified oecd scale disposable household income for all persons in the united kingdom great britain up to 20012 from institute for fiscal studies. The office of public affairs opa is the single point of contact for all inquiries about the central intelligence agency cia. Gini index world bank estimate brazil world bank, development research group.
Has the worldwide gini coefficient increased or decreased. Income gini ratio of families by race of householder, all races ratio, annual, not seasonally adjusted 1947 to 2018 sep 10 gini index for the democratic republic of the congo. Income inequality and limitations of the gini index. Through a nontrivial estimation of all country income distributions, economists maxim pinkovsky mit and xavier salaimartin columbia calculate the world. Gini index world bank estimate south africa world bank, development research group. This article is a nontechnical summary of a longer research paper by the same authors, entitled the rise and fall of brazilian inequality. The measure has been in use since its development by. Developed in 1912 by corado gini an italian statistician the gini coefficient is most prominently used as a measure of inequality of income or wealth distribution. The world bank definition states that it measures the extent to which the distribution of.
The gini coefficient measures the deviation of the distribution of income or consumption among individuals or households in a given country from a perfectly equal distribution. Of the countrys 200 million people as of 20, at least 40 million according to the world bank and possibly as many. The coefficient measures the degree the degree of concentration in a countrys income distribution. Xis the cumulative distribution of the population variable, for i 0,z with x 00 and x 11. The gini coefficient for household income in china the gini coefficient is an economic indicator measuring household income distribution. Social statisticians today use many different inequality measures, but none more than the gini coefficient. Living standards, inequality and poverty spreadsheet before housing costs deducted data bhc, downloaded 19 march 2017. It is based on the lorenz curve, a cumulative frequency curve that compares the distribution of a specific variable for example, income with the uniform distribution that represents equality. The coefficient ranges between 0 and 1, where 0 represents complete equality and 1 represents complete inequality. The world bank is the main organisation that provides the gini index data. The gini index or gini coefficient is a statistical measure of distribution developed by the italian statistician corrado gini in 1912. Also from table 1, the estimates of the gini index for lognormal distribution was found to be between 0. Y is the cumulative distribution of the income variable, for i 0,z with y 00 and y 11.
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