Gini Coefficient Formula (Based on Lorenz Curve Areas)

Figure 2.4b: Gini Coefficients from Various Lorenz Curves

Figure E2.1: Calculating the Gini Coefficient from a Lorenz Curve Diagram

Causal Link Between Lorenz Curve Area and Gini Coefficient

An economist is comparing income distribution in two countries. A graph shows a 45-degree line representing perfect equality. Country A's income distribution is represented by a curve that bows significantly away from this 45-degree line, creating a large area between the curve and the line. Country B's income distribution is represented by a curve that lies much closer to the 45-degree line, creating a very small area between its curve and the line. Based on this information, what can be conclu

Analyzing Policy Impact on Income Inequality

If a new government policy causes the area between the 45-degree line of perfect equality and a country's Lorenz curve to become smaller, this indicates that the country's Gini coefficient has increased.

Calculating Inequality from a Distribution Graph

Evaluating Inequality with Crossing Distribution Curves

Figure 2.4a: The Lorenz Curve and Gini Coefficient for Wealth Ownership