Distribution of income
How can we measure income distribution?
The gini coefficient is the ratio of the area between the Lorenz curve and the diagonal to the total area
beneath the diagonal. The Gini coefficient is a measure of statistical dispersion most prominently used
as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a
ratio with values between 0 and 1: the numerator is the area between the Lorenz curve of the
distribution and the uniform distribution line; the denominator is the area under the uniform
distribution line.
Define a perfectly equal and unequal income distribution using the Lorenz curve
Where G=0 we have perfect equality; where G=1 we have perfect inequality. a low Gini coefficient
indicates more equal income or wealth distribution, while a high Gini coefficient indicates more
unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and
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 Spring '08
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 Gini coefficient, Distribution of wealth, Income distribution

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