Understanding the Gini coefficient and the Lorenz curve

The Lorenz curve shows the percentage of overall income held by a percentage

of the population. If everyone has the same income, the Lorenz curve is a straight

line. This is also called the line of equality.

90% of the population

has 90% of the income.

100%

10% of the population

has 10% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

No country has an income distribution like this. They have Lorenz curves that dip

below this line of equality.

100%

The poorest 40% of

the population has

15% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

The area between that line and the curve is the inequality gap. The Gini coefficient

is equal to the concave area created by the Lorenz curve divided by the triangular

area under the line of equality.

100%

This area is 30% of the

whole triangle, giving it

a Gini coefficient of 0.3.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

A population in which everyone receives the same income has a Gini coefficient of 0.

A country in which one person has all the wealth would result in the area between

the curve and the line of inequality to be 100%, and is the most unequal.

Gini = 0

Gini = 0.3

Gini = 1

Quartz | qz.com

Understanding the Gini coefficient

and the Lorenz curve

The Lorenz curve shows the percentage

of overall income held by a percentage of the

population. If everyone has the same income,

the Lorenz curve is a straight line. This is also

called the line of equality.

90% of the population

has 90% of the income.

100%

10% of the population

has 10% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

No country has an income distribution like this.

They have Lorenz curves that dip below this

line of equality.

100%

The poorest 40% of

the population has

15% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

The area between that line and the curve is the

inequality gap. The Gini coefficient is equal to the

concave area created by the Lorenz curve divided

by the triangular area under the line of equality.

This area is 30% of the

whole triangle, giving it

a Gini coefficient of 0.3.

100%

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

A population in which everyone receives the same

income has a Gini coefficient of 0. A country in

which one person has all the wealth would result

in the area between the curve and the line of

inequality to be 100%, and is the most unequal.

Gini = 0

Gini = 0.3

Gini = 1

Quartz | qz.com

Understanding

the Gini coefficient

and the Lorenz curve

The Lorenz curve shows the

percentage of overall income held by

a percentage of the population. If

everyone has the same income, the

Lorenz curve is a straight line. This is

also called the line of equality.

90% of the population

has 90% of the income.

100%

10% of the population

has 10% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

No country has an income distribution

like this. They have Lorenz curves

that dip below this line of equality.

100%

The poorest 40% of

the population has

15% of the income.

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

The area between that line and the

curve is the inequality gap. The Gini

coefficient is equal to the concave

area created by the Lorenz curve

divided by the triangular area under

the line of equality.

This area is 30% of the

whole triangle, giving it

a Gini coefficient of 0.3.

100%

Cumulative

portion

of income

0

0

100%

Cumulative portion

of population

A population in which everyone

receives the same income has a Gini

coefficient of 0. A country in which

one person has all the wealth would

result in the area between the curve

and the line of inequality to be 100%,

and is the most unequal.

Gini = 0

Gini = 0.3

Gini = 1

Quartz | qz.com

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