What is Lorenz curve and Gini coefficient?
The Gini coefficient is equal to the area below the line of perfect equality (0.5 by definition) minus the area below the Lorenz curve, divided by the area below the line of perfect equality. In other words, it is double the area between the Lorenz curve and the line of perfect equality.
How do you calculate the Gini index from the Lorenz curve?
The Gini coefficient can be calculated using the formula: Gini Coefficient = A / (A + B), where A is the area above the Lorenz Curve and B is the area below the Lorenz Curve.
What does a Gini coefficient of 0 mean?
perfect equality
A Gini index of zero represents perfect equality and 100, perfect inequality.
What is a good Gini coefficient?
Gini index < 0.2 represents perfect income equality, 0.2–0.3 relative equality, 0.3–0.4 adequate equality, 0.4–0.5 big income gap, and above 0.5 represents severe income gap. Therefore, the warning level of Gini index is 0.4.
What does a Gini index of 40 mean?
Gini index < 0.2 represents perfect income equality, 0.2–0.3 relative equality, 0.3–0.4 adequate equality, 0.4–0.5 big income gap, and above 0.5 represents severe income gap. Therefore, the warning level of Gini index is 0.4. Cite. 1 Recommendation. 28th Feb, 2019.
What is the Gini index used for?
The Gini Index is a summary measure of income inequality. The Gini coefficient incorporates the detailed shares data into a single statistic, which summarizes the dispersion of income across the entire income distribution.
How do you calculate Gini coefficient in Excel?
This add-in for Microsoft Excel allows you to compute the Gini coefficient with Microsoft Excel. After installing the add-in, you have a new function = gini(incomes, population), where incomes is a column with the various income levels and population is the weight given to each entity.
How do you create a Gini coefficient in Excel?
You can use the autofill function, or select all columns and press Ctrl+D . Once you have output the areas of the individual trapezoidal strips, output the sum of them in one of the cells. =1-2*O4 . In this case with the data, the Gini coefficient becomes 48%.
What is a good Gini score?
What factors does the Gini coefficient include?
Four variables we tested – inflation, years of schooling, GDP per capita and government deficits (as a percent of GDP) – had no measurable influence on income inequality. Together, these factors explain roughly three-quarters of the differences in the Gini among the 53 countries in our review.