Difference between revisions of "Gini coefficient of inequality"
(clarification) |
|||
| Line 1: | Line 1: | ||
| − | The Gini coefficient of inequality is a measure of how uneven or unequal a distribution is. The ratio varies between | + | The Gini coefficient of inequality is a measure of how uneven or unequal a distribution is. The ratio varies between complete equality (0) and complete inequality (1). The '''Gini index''' is the Gini coefficient multiplied by 100. It is commonly used to evaluate the distribution of incomes in an economy. |
On a [[Lorenz diagram]], the Gini coefficient of inequality equals the area between the Lorenz curve and the diagonal line divided by the entire area that lies underneath the diagonal line.<ref>http://people.hofstra.edu/geotrans/eng/ch4en/meth4en/ch4m1en.html</ref> | On a [[Lorenz diagram]], the Gini coefficient of inequality equals the area between the Lorenz curve and the diagonal line divided by the entire area that lies underneath the diagonal line.<ref>http://people.hofstra.edu/geotrans/eng/ch4en/meth4en/ch4m1en.html</ref> | ||
| Line 7: | Line 7: | ||
== Criticism == | == Criticism == | ||
| − | It is | + | The Gini coefficient measures only inequality in terms of income, and not opportunity, lifetime income, or utility. It is used widely because of its simplicity, but this simplicity gives rise to a narrow range of focus. |
== References == | == References == | ||
Revision as of 13:38, August 6, 2010
The Gini coefficient of inequality is a measure of how uneven or unequal a distribution is. The ratio varies between complete equality (0) and complete inequality (1). The Gini index is the Gini coefficient multiplied by 100. It is commonly used to evaluate the distribution of incomes in an economy.
On a Lorenz diagram, the Gini coefficient of inequality equals the area between the Lorenz curve and the diagonal line divided by the entire area that lies underneath the diagonal line.[1]
The Gini coefficient was developed by the Italian statistician Corrado Gini in his 1912 paper entitled (in Italian) Variability and Mutability.
Criticism
The Gini coefficient measures only inequality in terms of income, and not opportunity, lifetime income, or utility. It is used widely because of its simplicity, but this simplicity gives rise to a narrow range of focus.