Gini Coefficient

Named after the Italian sociologist and statistician Corrado Gini (1884–1965), the Gini coefficient is a statistical metric used to measure dispersion in any type of distribution.

However, it is most widely used to measure “income inequality,” though not limited to it. It is derived from the Lorenz curve, developed by the American economist Max Lorenz (1880–1962), which represents concentration of income or wealth.

In Figure 1, the horizontal axis depicts the population sorted from the lowest-income group to the highest-income group, and the vertical axis depicts the income shares. The 45-degree line represents the complete-equality scenario, each quintile (20 percent) of the population obtaining exactly 20 percent of the total income. The Lorenz curve, right below the 45-degree line, shows the actual income distribution among the five ...