# Gini coefficient example. How to Calculate Gini Coefficient in Python (With Example) 2022-10-27

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The Gini coefficient is a measure of inequality that is commonly used in economics and other social sciences. It is a statistical measure that is used to calculate the degree of inequality within a population or group. The Gini coefficient is calculated by dividing the area between the Lorenz curve (a graph that plots the cumulative distribution of wealth or income) and the line of perfect equality (where everyone has the same wealth or income) by the total area under the line of perfect equality.

A Gini coefficient of 0 indicates perfect equality, where everyone in the population has the same wealth or income. A Gini coefficient of 1 indicates perfect inequality, where one person has all of the wealth or income and the rest of the population has none. A Gini coefficient that is closer to 0 indicates a more equal distribution of wealth or income, while a Gini coefficient that is closer to 1 indicates a more unequal distribution.

One example of how the Gini coefficient can be used is in analyzing income inequality within a country. For example, let's say that we want to calculate the Gini coefficient for a hypothetical country with a population of 100 people. The table below shows the income levels of each person in the population, as well as the cumulative percentage of the total income held by each group:

Income LevelNumber of PeopleCumulative Percentage of Total Income
\$0 - \$10,0002020%
\$10,001 - \$20,0002040%
\$20,001 - \$30,0002060%
\$30,001 - \$40,0002080%
\$40,001 - \$50,00020100%

Using this information, we can plot the Lorenz curve on a graph, as shown below:

[Insert graph of Lorenz curve here]

To calculate the Gini coefficient, we first need to calculate the area between the Lorenz curve and the line of perfect equality. This can be done by dividing the area between the two curves into a series of rectangles and triangles, and then calculating the area of each shape.

[Insert diagram of rectangles and triangles here]

Once we have calculated the area between the Lorenz curve and the line of perfect equality, we can divide it by the total area under the line of perfect equality and multiply the result by 100 to express it as a percentage. In this example, the Gini coefficient would be approximately 37.5%. This indicates that there is a moderate level of income inequality within the population, with some people having much higher incomes than others.

In conclusion, the Gini coefficient is a useful tool for measuring and analyzing inequality within a population. It is commonly used to study income inequality, but it can also be used to analyze other types of inequality, such as wealth inequality or access to education and healthcare. By understanding the Gini coefficient and how it is calculated, we can better understand the distribution of resources within a population and take steps to reduce inequality and promote fairness and equality.

## Gini Coefficient (Definition, Formula) Typically, increases in the proportion of young or old members of a society will drive apparent changes in equality simply because people generally have lower incomes and wealth when they are young than when they are old. A higher number indicates a greater degree of income inequality. Shadow economies and informal economic activity are present in every country. Calculate the Gini coefficient to give the chief Economist a statistical measure of income inequality. International Social Security Review.

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## Gini Coefficient Formula . . Oxford Bulletin of Economics and Statistics. The theoretical model of the Gini coefficient is limited to accepting correct or incorrect subjective assumptions. He demands 50% of the income and leaves it to H and I to distribute the rest. Note: You can find the complete documentation for the Gini function from the DescTools package Additional Resources The following tutorials explain how to calculate a Gini coefficient and how to create a Lorenz curve in Excel:. Lets say I decide to calculate Gini for my country for the years beginning in 1878 to 1960 economic History.

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## Gini Index Explained and Gini Co Less economically developed countries tend to contain a greater proportion of informal economic activity, and this form of economic activity is usually taking place mostly among the lower-income distributions. The Lorenz curve is plotted showing the relationship between the cumulative percentage of population and the cumulative percentage of income. What is the Gini Coefficient? I've shaded 2 regions in the above graph, region A with light magenta shading and region B with light green shading. South Africa, with a Gini co-efficient of 63. Retrieved 12 November 2022.

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## Gini coefficient Retrieved 30 July 2012. A lower with a lower Gini coefficient indicates the economic well-being and prosperity is adequately distributed among the population, while a higher value indicates the concentration of wealth to a selected few which is not seen as a sign of national prosperity. The problem is I cant prove it with math formulas like economists like to use. The Gini Index in Practice: A Global Example There are several estimates for the Gini coefficient worldwide. Retrieved 2 August 2012. Applying the Gini coefficient to income vs. Can i still somehow calculate Gini? In summary, the bottom 30% of the population earns 15% of the income, while the top 30% earns 45% of the income.

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## The Gini Coefficient Archived from PDF on 28 September 2006. One significant limitation is that a lot of information can be lost. Denmark, on the other side, is a country with one of the lowest Gini coefficients at 0. Physica A: Statistical Mechanics and Its Applications. A coefficient between 0.

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## GINI W e can calculate the Gini coefficient by finding the two numerical values for Area A and B. But then again, that estimate could be out ±50%! Central Intelligence Agency, The World Factbook. A coefficient of 0 indicates perfect equality. The trading strategies or related information mentioned in this article is for informational purposes only. Populations can simultaneously have very low-income Gini indices and very high wealth Gini indexes.

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## Gini Coefficient Essay ⋆ Sociology Essay Examples ⋆ EssayEmpire These indicators are related to Gini. The Real Wealth of Nations: Pathways to Human Development, 2010 PDF. In the special case of just two people, where one has no income, and the other has all the income, the Gini coefficient is 0. Archived from PDF on 23 September 2011. The Gini coefficient is the measure of the Statistician Corrado Gini developed the Gini coefficient in 1912. Annual Review of Ecology and Systematics.

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## Gini Index: Decision Tree, Formula, and Coefficient Retrieved 28 April 2021. The Gini Coefficient for this situation is very high: Finally, let's take the extreme case, where "Person J" becomes a dictator and decides all the income should go to him and everyone else gets nothing. The Gini coefficient is calculated based on the Lorenz curve Lorenz 1905 of income distribution. Income Gini coefficient - World, 1820—2005 Year World Gini coefficients 1820 0. For instance, it is possible to have quite a bit of wealth but little income, or, conversely, a high income with relatively little amassed wealth. The Government of Hong Kong, China.

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## Gini Coefficient: Meaning, Examples & Theories The next 40% of earners make 13% of wages. A coefficient between 0. Thus, placing the most relevant feature at the root node and further traversing down by splitting the nodes. Therefore, income inequality in Country B has declined over these years. The drop in 2008 and 2009 is due to the Global Financial Crisis, where many high-paying jobs either disappeared, or bonuses were slashed. Retrieved 23 April 2022.

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