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Comparative Inequality Analysis
An economist is comparing the income distribution of two countries, Country Alpha and Country Beta. For Country Alpha, the area between the line of perfect equality and its income distribution curve (Area A) is 0.12, and the area under its income distribution curve (Area B) is 0.38. For Country Beta, Area A is 0.21 and Area B is 0.29. Based on this information, calculate the Gini coefficient for each country and determine which country exhibits a higher degree of income inequality. Justify your conclusion.
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Figure 2.4a: The Lorenz Curve and Gini Coefficient for Wealth Ownership
A country's income distribution is represented graphically. The area between the line of perfect equality and the curve representing the actual income distribution (defined as Area A) is calculated to be 0.18. The total triangular area under the line of perfect equality (defined as the sum of Area A and Area B) is 0.5. Based on these values, what is the Gini coefficient for this country?
Comparative Inequality Analysis
Analyzing Changes in Income Distribution
Consider a society's income distribution represented graphically. If a policy change causes the area between the line of perfect equality and the curve of actual distribution (Area A) to increase, while the area under the curve of actual distribution (Area B) remains constant, the calculated measure of income inequality will necessarily increase.