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  • Approximation of the Gini Coefficient using the Lorenz Curve

Gini Coefficient Formula using Areas A and B

The Gini coefficient can be calculated from a Lorenz curve diagram using the formula: Gini=AA+BGini = \frac{A}{A+B}. In this formula, 'Area A' represents the area between the line of perfect equality and the Lorenz curve, while 'Area (A + B)' represents the total area of the triangle under the line of perfect equality.

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Economics

Economy

Introduction to Macroeconomics Course

Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ

The Economy 2.0 Macroeconomics @ CORE Econ

CORE Econ

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Learn After

  • 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.