Blackwell Reference Online

Extract

The Gini coefficient is the most commonly used measure of inequality. The coefficient is named after the Italian statistician and demographer Corrado Gini (1884–1965), who invented the measure in 1912. While the Gini coefficient is often used to measure income and wealth inequality, it is also widely employed to indicate uneven distribution in other social issues, such as industrial location and development, health care, and racial segregation. The coefficient ranges from 0 to 1, with 0 representing perfect equality (i.e., everyone has the same income) and 1 perfect inequality (i.e., a single person has all the income). An extension of the Gini coefficient is the Gini index, which equals the Gini coefficient multiplied by 100. The Gini coefficient is calculated based on the Lorenz curve ( Lorenz 1905 ) of income distribution. The graphical depiction of the Gini coefficient is shown in Figure 1 . The Lorenz curve is plotted showing the relationship between the cumulative percentage of population and the cumulative percentage of income. The diagonal or 45 degree line indicates a perfect distribution of population and income (e.g., 30 percent of the population earns 30 percent of the income and 80 percent of the population earns 80 percent of the income). The Gini coefficient is the ratio of the area between the Lorenz curve of income distribution and the diagonal line of perfect ... log in or subscribe to read full text