The Gini coefficient quantifies income or wealth inequality within a population. It ranges from 0, representing perfect equality where everyone has the same income or wealth, to 1, representing maximum inequality where one person has all the income or wealth and everyone else has none. The value is derived by examining the Lorenz curve, which plots the cumulative percentage of total income earned against the cumulative percentage of the population, ranked from lowest to highest income. An example would be a coefficient of 0.45, indicating a moderate level of inequality within the observed distribution.
This measure of inequality serves as a vital tool for economists, sociologists, and policymakers. It allows for the objective assessment of income distributions across different societies, regions, or time periods, enabling informed decisions regarding social programs and economic policies aimed at reducing disparity. Its adoption in international comparisons and policy evaluation highlights its broad applicability and significance in addressing issues of social and economic justice. The concept builds upon earlier work by statistician Corrado Gini, providing a standardized metric for evaluating distribution.
