Gini coefficient

World map of income inequality Gini coefficients by country (as %). Based on World Bank data ranging from 1992 to 2020. [1]
  •   Above 50
  •   Between 45 to 50
  •   Between 40 to 45
  •   Between 35 to 40
  •   Between 30 to 35
  •   Below 30
  •   No data
A map showing Gini coefficients for wealth within countries for 2019[2]
Global share of wealth by wealth group, Credit Suisse, 2021[citation needed]

In economics, the Gini coefficient (/ˈni/ JEE-nee), also known as the Gini index or Gini ratio, is a measure of statistical dispersion intended to represent the income inequality or the wealth inequality within a nation or a social group. The Gini coefficient was developed by the statistician and sociologist Corrado Gini.

The Gini coefficient measures the inequality among values of a frequency distribution, such as the levels of income. A Gini coefficient of 0 expresses perfect equality, where all values are the same, while a Gini coefficient of 1 (or 100%) expresses maximal inequality among values. For example, if everyone has the same income, the Gini coefficient will be 0. In contrast, if for a large number of people only one person has all the income or consumption and all others have none, the Gini coefficient will be nearly one.[3][4]

The Gini coefficient was proposed by Corrado Gini as a measure of inequality of income or wealth.[5] For OECD countries, in the late 20th century, considering the effect of taxes and transfer payments, the income Gini coefficient ranged between 0.24 and 0.49, with Slovenia being the lowest and Mexico the highest.[6] African countries had the highest pre-tax Gini coefficients in 2008–2009, with South Africa having the world's highest, variously estimated to be 0.63 to 0.7,[7][8] although this figure drops to 0.52 after social assistance is taken into account, and drops again to 0.47 after taxation.[9] The global income Gini coefficient in 2005 has been estimated to be between 0.61 and 0.68 by various sources.[10][11]

There are some issues in interpreting a Gini coefficient; the same value may result from many different distribution curves. The demographic structure should be taken into account. Countries with an aging population or with a baby boom experience an increasing pre-tax Gini coefficient even if real income distribution for working adults remains constant. Scholars have devised over a dozen variants of the Gini coefficient.[12][13][14]

  1. ^ "Gini index (World Bank estimate)". Retrieved 23 April 2022.
  2. ^ "Global wealth databook 2019" (PDF). Credit Suisse.
  3. ^ "Current Population Survey (CPS) – Definitions and Explanations". US Census Bureau.
  4. ^ Note: Gini coefficient could be near one only in a large population where a few persons has all the income. In the special case of just two people, where one has no income, and the other has all the income, the Gini coefficient is 0.5. For five people, where four have no income, and the fifth has all the income, the Gini coefficient is 0.8. See: FAO, United Nations – Inequality Analysis, The Gini Index Module Archived 13 July 2017 at the Wayback Machine (PDF format),
  5. ^ Gini, Corrado (1936). "On the Measure of Concentration with Special Reference to Income and Statistics", Colorado College Publication, General Series No. 208, 73–79.
  6. ^ "Income distribution – Inequality: Income distribution – Inequality – Country tables". OECD. 2012. Archived from the original on 9 November 2014.
  7. ^ Q4 snapshots/KPMG_South Africa 2013Q4.pdf "South Africa Snapshot, Q4 2013" (PDF). KPMG. 2013. {{cite web}}: Check |url= value (help)[dead link]
  8. ^ "Gini Coefficient". United Nations Development Program. 2012. Archived from the original on 12 July 2014.
  9. ^ Schüssler, Mike (16 July 2014). "The Gini is still in the bottle". Money Web. Retrieved 24 November 2014.
  10. ^ Hillebrand, Evan (June 2009). "Poverty, Growth, and Inequality over the Next 50 Years" (PDF). FAO, United Nations – Economic and Social Development Department. Archived from the original (PDF) on 20 October 2017.
  11. ^ Cite error: The named reference undp10 was invoked but never defined (see the help page).
  12. ^ Yitzhaki, Shlomo (1998). "More than a Dozen Alternative Ways of Spelling Gini" (PDF). Economic Inequality. 8: 13–30.
  13. ^ Sung, Myung Jae (August 2010). "Population Aging, Mobility of Quarterly Incomes, and Annual Income Inequality: Theoretical Discussion and Empirical Findings". CiteSeerX {{cite journal}}: Cite journal requires |journal= (help)
  14. ^ Cite error: The named reference blomq81 was invoked but never defined (see the help page).

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