How do you calculate the Gini coefficient?
What is the Gini Coefficient Formula?
- Examples of Gini Coefficient Formula (With Excel Template) Let’s take an example to understand the calculation of the Gini Coefficient in a better manner. ...
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Which country has highest Gini coefficient?
- Turkey.
- United States.
- Lithuania.
- Russia.
- South Korea.
- United Kingdom.
- New Zealand.
- Latvia.
How to measure Gini coefficient?
There are three common methods to derive the Gini coefficient:
- Extract the Gini coefficient from the CAP curve.
- Construct the Lorenz curve, extract Corrado Gini’s measure, then derive the Gini coefficient.
- Construct the ROC curve to extract the AUC then derive the Gini coefficient.
What does Gini Coefficient measure?
- Xk is the cumulated proportion of the population variable, for k = 0,..., n, with X0 = 0, Xn = 1.
- Yk is the cumulated proportion of the income variable, for k = 0,..., n, with Y0 = 0, Yn = 1.
- Yk should be indexed in non-decreasing order ( Yk > Yk – 1)
What is the Gini coefficient of UK 2020?
34.6%Income inequality has been broadly stable over the past 10 years with the Gini coefficient reaching 34.6% in FYE 2020 after peaking at 38.6% just prior to the 2008 economic downturn.
What is the UK Gini coefficient 2019?
The latest estimate is for 2019/20 and shows that the Gini coefficient for the UK was 35% based on income before housing costs and 39% based on income after housing costs.
Which country has the highest Gini coefficient 2020?
South Africa had the highest inequality in income distribution with a Gini score of 63, according to the Gini Index 2020. The Gini coefficient measures the deviation of the distribution of income (or consumption) among individuals or households within a country from a perfectly equal distribution.
What is the Gini coefficient of USA?
The United States has a Gini coefficient of 41.1.
Does the UK have high inequality?
International comparisons. OECD figures suggest that the UK has among the highest levels of income inequality in the European Union (as measured by the Gini coefficient), although income inequality is lower than in the United States.
What is a good Gini score?
Gini index < 0.2 represents perfect income equality, 0.2–0.3 relative equality, 0.3–0.4 adequate equality, 0.4–0.5 big income gap, and above 0.5 represents severe income gap. Therefore, the warning level of Gini index is 0.4.
Is Britain the most unequal country in Europe?
Compared to other developed countries the UK has a very unequal distribution of income, with a Gini coefficient of 0.35. According to 2013 data from 19 OECD member states in the Luxembourg Income Study data set, the UK is the fifth most unequal, and fourth most unequal in Europe.
What is Russia Gini coefficient?
36Russia's Gini index score was measured at 36 in 2020. The indicator increased from the previous year, which refers to an increase in economic equality. Over the observed period, the highest Gini index in Russia was recorded at 41.3 in 2005.
What is China's Gini coefficient 2021?
China's current Gini coefficient is 0.47; that number should be lowered to 0.4 by 2025 and get to 0.35 “or at least significantly below 0.4” by 2035, added Cai, who is a member of the monetary policy committee of the People's Bank of China.
What is the Gini coefficient of China?
That means China's Gini coefficient (0.481) belongs to a handful of countries with top inequality in the world, not only higher than that of western developed countries, but also above Asia's average (0.3513).
Is income inequality greater in the US or UK?
The U.S. Has Higher Income Inequality Than Britain.
What is the Gini coefficient of Germany?
34.4 pointsIn Germany, the Gini index increased from 29 points in 2011 to 34.4 points in 2020. The Gini Index is a measurement of inequality within economies, a lower score indicates more equality while a higher score implies more inequality.
What is the Gini coefficient of the world?
The global income Gini coefficient in 2005 has been estimated to be between 0.61 and 0.68 by various sources. There are some issues in interpreting a Gini coefficient; the same value may result from many different distribution curves.
What is Russia Gini coefficient?
36Russia's Gini index score was measured at 36 in 2020. The indicator increased from the previous year, which refers to an increase in economic equality. Over the observed period, the highest Gini index in Russia was recorded at 41.3 in 2005.
What is the Gini coefficient of China?
That means China's Gini coefficient (0.481) belongs to a handful of countries with top inequality in the world, not only higher than that of western developed countries, but also above Asia's average (0.3513).
Is a high Gini coefficient good?
A higher Gini index indicates greater inequality, with high-income individuals receiving much larger percentages of the total income of the population.
What is the most widely used summary measure of inequality in the distribution of household income?
The most widely used summary measure of inequality in the distribution of household income is the Gini coefficient. The lower its value, the more equally household income is distributed. The Gini coefficient is a measure of the way in which different groups of households receive differing shares of total household income.
What is the Lorenz curve?
Based on a ranking of households in order of ascending income, the Lorenz curve is a plot of the cumulative share of household income against the cumulative share of households. The curve will lie somewhere between two extremes.
What is Gini coefficient?
The Gini coefficient (Gini index or Gini ratio) is a statistical measure of economic inequality in a population. The coefficient measures the dispersion of income. Remuneration Remuneration is any type of compensation or payment that an individual or employee receives as payment for their services or the work that they do for an organization ...
What are the drawbacks of the coefficient?
One of the drawbacks of the coefficient is that it does not take into consideration the structural changes in a population. Such changes can significantly influence the economic inequality in a population. Generally, the situation arises because young people tend to earn less relative to older people.
What does a coefficient of zero mean?
The coefficient can take any values between 0 to 1 (or 0% to 100%). A coefficient of zero indicates a perfectly equal distribution of income or wealth. Gross Domestic Product (GDP) Gross domestic product (GDP) is a standard measure of a country’s economic health and an indicator of its standard of living.
Is the Gini coefficient an absolute measure of wealth?
Please note that the Gini coefficient is not an absolute measure of a country’s income or wealth. The coefficient only measures the dispersion of income or wealth within a population.
Does the Gini coefficient depend on the economy?
The calculation of the Gini coefficient does not depend on how large the economy is, how it is measured, or how wealthy a country is. For example, both rich and poor countries may show the same coefficient due to similar income distribution.
Is the Gini coefficient valid?
The validity of Gini coefficient calculations can be dependent on the size of a sample. For example, small countries or countries with less economic diversity frequently tend to show low coefficients, while large economically diverse countries usually demonstrate high coefficients.
What is Gini coefficient?
In economics, the Gini coefficient ( / ˈdʒiːni / JEE-nee ), sometimes called the Gini index or Gini ratio, is a measure of statistical dispersion intended to represent the income inequality or wealth inequality within a nation or any other group of people. It was developed by the Italian statistician and sociologist Corrado Gini .
Why is Gini coefficient important?
The Gini coefficient is a relative measure. It is possible for the Gini coefficient of a developing country to rise (due to increasing inequality of income) while the number of people in absolute poverty decreases. This is because the Gini coefficient measures relative, not absolute, wealth. Changing income inequality, measured by Gini coefficients, can be due to structural changes in a society such as growing population (baby booms, aging populations, increased divorce rates, extended family households splitting into nuclear families, emigration, immigration) and income mobility. Gini coefficients are simple, and this simplicity can lead to oversights and can confuse the comparison of different populations; for example, while both Bangladesh (per capita income of $1,693) and the Netherlands (per capita income of $42,183) had an income Gini coefficient of 0.31 in 2010, the quality of life, economic opportunity and absolute income in these countries are very different, i.e. countries may have identical Gini coefficients, but differ greatly in wealth. Basic necessities may be available to all in a developed economy, while in an undeveloped economy with the same Gini coefficient, basic necessities may be unavailable to most or unequally available, due to lower absolute wealth.
What is the Gini index?
Gini index has a downward-bias for small populations. Counties or states or countries with small populations and less diverse economies will tend to report small Gini coefficients. For economically diverse large population groups, a much higher coefficient is expected than for each of its regions. Taking world economy as one, and income distribution for all human beings, for example, different scholars estimate global Gini index to range between 0.61 and 0.68. As with other inequality coefficients, the Gini coefficient is influenced by the granularity of the measurements. For example, five 20% quantiles (low granularity) will usually yield a lower Gini coefficient than twenty 5% quantiles (high granularity) for the same distribution. Philippe Monfort has shown that using inconsistent or unspecified granularity limits the usefulness of Gini coefficient measurements.
What is opportunity Gini coefficient?
Similar in concept to income Gini coefficient, opportunity Gini coefficient measures inequality of opportunity. The concept builds on Amartya Sen 's suggestion that inequality coefficients of social development should be premised on the process of enlarging people's choices and enhancing their capabilities, rather than on the process of reducing income inequality. Kovacevic in a review of opportunity Gini coefficient explains that the coefficient estimates how well a society enables its citizens to achieve success in life where the success is based on a person's choices, efforts and talents, not his background defined by a set of predetermined circumstances at birth, such as, gender, race, place of birth, parent's income and circumstances beyond the control of that individual.
What is the Gini index for education?
Education Gini index estimates the inequality in education for a given population. It is used to discern trends in social development through educational attainment over time. From a study of 85 countries by three Economists of World Bank Vinod Thomas, Yan Wang, Xibo Fan, estimate Mali had the highest education Gini index of 0.92 in 1990 (implying very high inequality in education attainment across the population), while the United States had the lowest education inequality Gini index of 0.14. Between 1960 and 1990, China, India and South Korea had the fastest drop in education inequality Gini Index. They also claim education Gini index for the United States slightly increased over the 1980–1990 period.
When did the Gini index increase?
There was a steady increase in the global income inequality Gini score from 1820 to 2002, with a significant increase between 1980 and 2002.
When was the income mobility index introduced?
Income mobility. In 1978, Anthony Shorrocks introduced a measure based on income Gini coefficients to estimate income mobility. This measure, generalized by Maasoumi and Zandvakili, is now generally referred to as Shorrocks index, sometimes as Shorrocks mobility index or Shorrocks rigidity index.
What is the Gini coefficient?
The Gini coefficient ranges between 0% and 100%, where 0% indicates that income is shared equally among all households and 100% indicates the extreme situation where one household accounts for all income .
What is mean income?
The mean measure of income divides the total income of individuals by the number of individuals. A limitation of using the mean is that it can be influenced by just a few individuals with very high incomes and therefore does not necessarily reflect the standard of living of the “typical” person. However, when breaking down changes in income and direct taxes by income decile or types of households, the mean allows for these changes to be analysed in an additive way.
What is the S80/S20 ratio?
The S80/S20 ratio highlights that the richest fifth of people had a share of income that was over six times that for the poorest fifth in both FYE 2019 and FYE 2020. The income of the person at the 90th percentile was over four times the income of the person at the 10th percentile, while the Palma ratio highlights that the richest 10% of people accounted for a greater share of income than the poorest 40%. These measures of inequality remain largely unchanged from the previous year (Table 1).
What is disposable income?
Disposable income is the amount of money that households have available for spending and saving after direct taxes (such as Income Tax and Council Tax) have been accounted for. It includes earnings from employment, private pensions and investments, as well as cash benefits provided by the state. More information on the different stages of income can be found in the Things you need to know about this release section of Effects of taxes and benefits on UK household income: financial year ending 2017.
What is equivalisation in a household?
Equivalisation is the process of accounting for the fact that households with many members are likely to need a higher income to achieve the same standard of living as households with fewer members. Equivalisation considers the number of people living in the household and their ages, acknowledging that while a household with two people in it will need more money to sustain the same living standards as one with a single person, the two-person household is unlikely to need double the income.
Overview
External links
• Deutsche Bundesbank: Do banks diversify loan portfolios?, 2005 (on using e.g. the Gini coefficient for risk evaluation of loan portfolios)
• Forbes Article, In praise of inequality
• Measuring Software Project Risk With The Gini Coefficient, an application of the Gini coefficient to software
History
The Gini coefficient was developed by the Italian statistician Corrado Gini and published in his 1912 paper Variability and Mutability (Italian: Variabilità e mutabilità). Building on the work of American economist Max Lorenz, Gini proposed that the difference between the hypothetical straight line depicting perfect equality, and the actual line depicting people's incomes, be used as a measure of inequality.
Definition
The Gini coefficient is a single number that demonstrates a degree of inequality in a distribution of income/wealth. It is used to estimate how far a country's wealth or income distribution deviates from a totally equal distribution.
The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y axis) that is …
Calculation
While the income distribution of any particular country will not always follow theoretical models in reality, these functions give a qualitative understanding of the income distribution in a nation given the Gini coefficient.
The extreme cases are represented by the "most equal" society in which every person receives the same income (G = 0) and the "most unequal" society (com…
Generalized inequality indices
The Gini coefficient and other standard inequality indices reduce to a common form. Perfect equality—the absence of inequality—exists when and only when the inequality ratio, , equals 1 for all j units in some population (for example, there is perfect income equality when everyone's income equals the mean income , so that for everyone). Measures of inequality, then, are measures of the average deviations of the from 1; the greater the average deviation, the greater the inequali…
Of income distributions
Gini coefficients of income are calculated on a market income as well as a disposable income basis. The Gini coefficient on market income—sometimes referred to as a pre-tax Gini coefficient—is calculated on income before taxes and transfers, and it measures inequality in income without considering the effect of taxes and social spending already in place in a country. The Gini coef…
Of social development
Gini coefficient is widely used in fields as diverse as sociology, economics, health science, ecology, engineering and agriculture. For example, in social sciences and economics, in addition to income Gini coefficients, scholars have published education Gini coefficients and opportunity Gini coefficients.
Education Gini index estimates the inequality in education for a given population. It is used to di…