1. What is the Gini Coefficient?

The Gini coefficient is a measure of statistical dispersion intended to represent income inequality or wealth inequality within a nation or any other group of people. It ranges from 0 (perfect equality) to 1 (perfect inequality).

2. How Does the Calculator Work?

The calculator uses the basic Gini coefficient formula:

Where:

• Area under Lorenz curve — The area between the line of equality and the Lorenz curve

Explanation: The Lorenz curve plots the cumulative percentage of total income received against the cumulative percentage of recipients. The Gini coefficient is derived from this curve.

3. Interpretation of Gini Coefficient

Details:

• 0 = Perfect equality (everyone has exactly the same income)
• 0.2-0.3 = Relatively equal income distribution
• 0.3-0.4 = Moderate inequality
• 0.4-0.5 = High inequality
• 1 = Perfect inequality (one person has all the income)

4. Using the Calculator

Tips: Enter the area under the Lorenz curve (between 0 and 0.5). The calculator will compute the Gini coefficient.

5. Frequently Asked Questions (FAQ)

Q1: What's a "good" Gini coefficient?
A: There's no universal standard, but generally coefficients below 0.3 are considered good, while above 0.4 may indicate problematic inequality.

Q2: How is the Lorenz curve area calculated?
A: Typically calculated using integration under the Lorenz curve, which requires income distribution data.

Q3: What are limitations of the Gini coefficient?
A: It doesn't show where the inequality occurs in the distribution and can be sensitive to outliers.

Q4: Can Gini be greater than 1?
A: No, by definition it ranges between 0 and 1.

Q5: How often is Gini coefficient calculated for countries?
A: Most developed countries calculate it annually, while others may do it less frequently.