Measuring Inequality: The Gini Coefficient

Averages tell us how much income a country has; inequality measures tell us how it is shared. The most widely used is the Gini coefficient, developed by Italian statistician Corrado Gini in 1912, which ranges from 0, where everyone has the same income, to 1, where one person has everything. It is derived from the Lorenz curve, which plots the share of income received by the poorest 10, 20 or 50 percent of people. Countries differ widely: many Nordic countries have Gini values around 0. 25–0.

28 for disposable income, while South Africa's is above 0. 6. Taxes and transfers often lower inequality substantially, so economists distinguish market income from disposable income. Because the Gini summarizes a whole distribution in one number, analysts also use ratios such as the income share of the top 10 percent, and they debate whether rising inequality reflects technology, trade, policy or all three.