1. What is the Gini Coefficient?

The Gini coefficient is a measure of statistical dispersion intended to represent the 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 Gini coefficient formula:

Where:

• \( G \) — Gini coefficient (unitless)
• \( n \) — Number of individuals
• \( \mu \) — Mean income of the population
• \( y_i \) — Income of individual \( i \) (sorted in ascending order)

Explanation: The formula calculates the area between the Lorenz curve (which plots actual income distribution) and the line of perfect equality.

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 all income values separated by commas. The calculator will sort them automatically and compute the Gini coefficient.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a "good" Gini coefficient?
A: Generally, coefficients below 0.3 are considered acceptable, while above 0.4 may indicate problematic inequality.

Q2: How does this compare to other inequality measures?
A: The Gini coefficient is more comprehensive than simple ratios (like 90/10 ratio) but less detailed than the entire Lorenz curve.

Q3: What are limitations of the Gini coefficient?
A: It doesn't show where in the distribution inequality occurs, and can give same value for different shaped distributions.

Q4: Should income be before or after taxes?
A: Typically after taxes and transfers are used, as this reflects actual disposable income.

Q5: How often should Gini coefficient be calculated?
A: Annual calculation is common for tracking trends, but frequency depends on data availability.