What is the Gini Index?

Gini Index or Gini coefficient is a statistical representation of the relative distribution of the source throughout the population. The Gini Index most often refers to the level of equality with respect to the division of assets or income. The index ranges from zero to one, with the value of zero indicating a perfectly fair distribution of the source. Statistics sometimes multiply by an index by 100, so the potential distribution ranges from zero to 100. World economists have calculated Gini indices for different countries, with the scope decreased between 25, with the most suitable division of income in Denmark and 70.

Income population distribution can be graphically represented by the Lorenz curve, with the percentage of the population on the horizontal axis and the percentage of income on the vertical axis. The 45 -step line sloping up and on the right represents a perfectly fair disturbance of income, while Lorenz's curve is concave, the arch falls below the line. Gini Index is the ratio of the area lying between the angled line and the lorenz curveou divided by the total surface below the line. With the range of the axis between zero and once, the total area below the line is always equal to 0.5. The Gini Index is therefore equal to twice the surface between the angle and the Lorenz curve.

The benefits of the Gini index include its versatility across different groups of populations. Use is simple. The index does not depend on the sample used so that the population of any size can be studied. Similarly, it does not depend on the scope of the economy, so countries with small to large economies can be assessed. Finally, the Gini Index does not require explicit identification of earnings with the highest and low incomes.

with similar Gini indices, the revenue of various populations may vary significantly. For example, a population where 50 percent of earnings equally share 100 percent of income will have the same Gini index as a population where the 25 best evaluate 75 percent of income and the lower 75 percent share 25 percent of income. Lorenzo curves, howeverThey have different shapes. If there are differences in the level of opportunities or effectiveness of resource use, the Gini Index may underestimate inequality. Gini indices reflect the image in time and do not take into account changes in various life stages.

Gini indices can be used to explore trends over time. The first Gini index was reported in the United States in the United States of 39.7 per 1967. Since then, the Gini Index has become in 2006 in 2006.Bulion.