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Gini coefficient

The Gini coefficient is a measure of income inequality developed by the Italian statistician Corrado Gini. The Gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality (where everyone has the same income) and 1 corresponds with perfect inequality (where one person has all the income, and everyone else has zero income). The Gini index is the Gini coefficient expressed in percentage form and is equal to the Gini coefficient multiplied by 100.

While the Gini coefficient is mostly used to measure income inequality, it can also be used to measure wealth inequality - although it requires that no one has a negative net wealth.

The Gini coefficient is calculated as a ratio of areas on the Lorenz curve diagram. If the area between the line of perfect equality and Lorenz curve is A, and the area underneath the Lorenz curve is B, the Gini coefficient is A/(A+B). This ratio is expressed as a percentage or as the numerical equivalent of that percentage, which is always a number between 0 and 1.

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Last updated: 10-24-2004 05:10:45