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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