EC207 Lecture Notes - Lecture 5: Lorenz Curve, Gini Coefficient, Simon Kuznets
Document Summary
Lesson 2. 1: poverty, inequality and development part 1: explain lorenz curves and the gini coefficient. The lorenz curve is a graph depicting the variance of the size distribution of income relative to perfect equality. The numbers of income recipients are plotted on the horizontal axis. Please note that the population is ranked by income first. The vertical axis shows the share of total income received by each percentage of population. The diagonal line in the square contains the points where the percentage of income received is exactly equal to the percentage of income recipients which represents perfect equality in the distribution of income. For example, the point in the middle of the diagonal represents 50% of the income being distributed to exactly 50% of the population. Whenever two lorenz curves cross, such as curves b and c, we need more information before we can determine which of the underlying economies is more equal.
