The Lorenz curve is a useful tool used by those interested in statistics and economics to give a picture of income distribution. Its plots the % of household income on the vertical scale against the % of households on the horizontal. See opposite
The Gini Coefficient is derived from the same information used to create a Lorenz Curve. The co-efficient indicates the gap between two percentages: the percentage of population, and the percentage of income received by each percentage of the population. In order to calculate this you divide the area between the Lorenz Curve and the 45° line by the total area below the 45° line eg.
Area between the Lorenz Curve and the 45° line ÷ Total area below the 45° line
Below is a graphic from the World Inequality Report 2022 published by the World Inequality Lab. Useful figures especially with the top 1% and 10% of world population and the distribution of wealth, income and carbon emissions. Much can be done about inequality and that it is always a political choice, with better policy design inevitably leading to fairer development pathways.
Source: IMF Blog
Sign up to elearneconomics for multiple choice test questions (many with coloured diagrams and models) and the reasoned answers on the Gini coefficient. Immediate feedback and tracked results allow students to identify areas of strength and weakness vital for student-centred learning and understanding.
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