ECON 313 Chapter Notes - Chapter 5: Subsistence Agriculture, Gini Coefficient, Lorenz Curve
18 Apr 2016
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A common measure of this is the ratio (sometimes called the. The numbers of income recipients are on the horizontal axis in cumulative percentages. It shows the actual quantitative relationship between the percentage of income recipients and the percentage of the total income they received. The more the lorenz line curves away from the line of equality, the greater the inequality represented: gini coefficient: An aggregate numerical measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality). It is measured graphically by dividing the area between the perfect equality line and the lorenz curve by the total area lying to the right of the equality line in a lorenz diagram. When two curves cross, you need more information to determine which society is more equal the gini coefficient can be used (though in theory it could be identical for two lorenz curves that cross). Four desirable properties of the gini coefficient:
