Week 2 BUS 61

# Week 2 BUS 61 - Week 2 BUS 61 1. Gini Index The Gini...

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Week 2 BUS 61 1.  What meant by the Gini Index and how is it computed? Gini Index: The Gini coefficient is a measures of statistical dispersion developed by the Italian people Statistics Corrado Gin and published in his 1912 paper "Variability and Mutability" Italian language (: Variability e mutability) Gini coefficient The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality. It has found application in the study of inequalities in disciplines as diverse as Economics, Health science, Ecology, Chemistry, Engineering. It is commonly used as a measure of inequality of ncome inequality metrics Wealth condensatio. Worldwide, Gini coefficients for income range from approximately 0.23 (Sweden) to 0.70 (Namibia) although not every country has been assessed. A statistical measure of inequality which 0 is perfect equality (every one has the same amount of wealth) and 100 is absolute inequality (a single person has all the wealth) Gini says: “measuring income inequality” There are several ways to express the degree of income inequality in a society. The simplest way is to arrange whatever units you choose persons, families, or households in rank order, from poorest to richest; divide the hierarchy into fifths (quintiles) or tenths (deciles); and compute either the average income by docile or quintile or the share that each grouping has of the society's total income. Then, the shares or averages of rich and poor can be compared. Here are examples for the U.S. for two important years 1968, when the U.S. income distribution was the most equal it has been in modern times, and 1992, when it was the most unequal (so far!). The five columns on the left show the share of pretax income earned by each quintile of households, from the poorest to the richest; columns six through nine show the ratios of those shares for the richest to poorest, the middle to

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the poorest, and the richest to the middle. Note that from 1968 to 1992, the increase in inequality was almost entirely the result of the rich getting richer at the expense of the lower-middle and middle ranks. This technique is simple and revealing, but not without awkwardness: which comparison to choose? Economists have devised several ways of making such comparisons with a single index number. The most popular of these is the Gini index (or coefficient or ratio or number). While it simplifies comparisons, however, the Gini is not easy to explain. Here's an attempt to do so.
2.  Explain how many of the world's population live in poverty  and define how you measured that poverty level.            Since the publication of its  Human Development Report  (1997), the  United Nations has defined poverty as the "denial of choices and  opportunities most basic to human development—to lead a long,  healthy, creative life and enjoy a decent standard of living, freedom,

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Week 2 BUS 61 - Week 2 BUS 61 1. Gini Index The Gini...

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