1. What is the Gini Coefficient?

The Gini coefficient is a measure of statistical dispersion intended to represent income inequality or wealth inequality within a nation or any other group of people. It ranges from 0 (perfect equality) to 1 (perfect inequality).

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( cum\_pop_k \) — Cumulative proportion of the population up to group k
• \( cum\_inc_k \) — Cumulative proportion of income up to group k

Explanation: The Gini coefficient is calculated by plotting the cumulative percentage of income against the cumulative percentage of population (Lorenz curve) and measuring the area between this curve and the line of perfect equality.

3. Interpretation of Gini Coefficient

Details:

• 0 = Perfect equality (everyone has exactly the same income)
• 0.2-0.3 = Relatively equal income distribution
• 0.3-0.4 = Moderate inequality
• 0.4-0.5 = High inequality
• 1 = Perfect inequality (one person has all the income)

4. Using the Calculator

Tips: Enter population percentages and income percentages as comma-separated values. The calculator will normalize them to sum to 1 (100%). For example, for quintiles you might enter "20,20,20,20,20" for population and "5,10,15,25,45" for income.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical Gini coefficient for countries?
A: Most developed nations range between 0.24 and 0.36, while developing nations often range between 0.36 and 0.52.

Q2: What are limitations of the Gini coefficient?
A: It doesn't show where the inequality occurs, is sensitive to middle income changes, and can't distinguish between different shaped Lorenz curves with the same area.

Q3: How is this related to the Lorenz curve?
A: The Gini coefficient is the ratio of the area between the Lorenz curve and the line of equality to the total area under the line of equality.

Q4: Can the Gini coefficient be greater than 1?
A: No, the theoretical maximum is 1 (perfect inequality), though in practice with negative incomes it could exceed 1.

Q5: What's the difference between wealth Gini and income Gini?
A: Wealth Gini typically shows higher inequality than income Gini because wealth is more concentrated.