Coefficient of Gini
The coefficient of Gini is a measurement of the degree of inequality of the distribution of income in a given company, developed by the Italian statistician Corrado Gini.
The Coefficient of Gini is a variable number from 0 to 1, where 0 mean the perfect equality (everyone has the same income) and 1 means the total inequality (a person has all the income, the others do not have anything).
Calculation of the coefficient of Gini
The coefficient of Gini can be represented by a diagram of the Lorenz curve . If the surface of the zone between the diagonal of perfect equality (in dotted lines) and the curve of Lorentz (in fat) has, and the surface of the zone outside the Lorenz curve is B, then the coefficient of Gini has (A+B).
In practice, one does not have the income of each inhabitant, but of “sections” of the population. For N sections, the coefficient is obtained by the formula of Brown:
where X is the cumulated share of the population, and Y the cumulated share of the income.
Graphically, it is the surface of the zone between the line of perfect equality and the curve of the real situation. The larger the surface is, the higher the percentage is and thus more the inequalities are important.
Remark : in fact the coefficient of Gini is always strictly lower than 1, the Lorenz curve which cannot be the union of the two segments and.
Some examples
The historically levelling countries have a coefficient of about 0,2 (Bulgaria, Hungary, Slovakia, Tchèquie, Poland,…). The most uneven countries in the world have a coefficient of 0,6 (Brésil, Mexico, Guatemala, Honduras, Panama,…). In France, the coefficient of Gini is of 0,36 (source: INSEE returned tax 2004). That of China east going up and exceeds 0,5 now.
Other applications
The coefficient of Gini is mainly used to measure the inequality of income, but it can also be used to measure the inequality of richness or inheritance. The coefficient of Gini in economy is often combined with other data. Being located within the framework of the study of the inequalities, it goes hand in hand with the policy. Its bonds with the Indicateur Démocratique (worked out by the researchers of, between -2.5 in the worst case and +2.5 at best) are real but not automatic.It is also used by the logisticians out of warehouses to study the establishment of the references according to the statistics of exits of the articles. In data processing, the coefficient of Gini is employed within the framework of certain methods of Apprentissage supervised, like the decision trees.
See too
Internal bond
- List of the countries by equality of incomes
- Inequalities of Indicating income
- Indicating of poverty
- of human development (IDH)
- Gross domestic product | rough National product | rough National revenue
- Deflator of the GDP
- Law of Okun
External bonds
- World Bank explanatory note
- Classification of the countries
- Inequality Calculator
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