Measuring inequality: what is the Gini coefficient?
The Gini coefficient is the most common way of measuring inequality. But what does it actually measure? And how does it differ from other measures of inequality?
Introduction
Link this to your Economics: "The Gini coefficient, or Gini index, is the most commonly used measure of inequality. It was developed by Italian statistician Corrado Gini (1884–1965) and is named after him. It is typically used as a measure of income inequality, but it can be used to measure the inequality of any distribution — such as the distribution of wealth or even life expectancy.1 It measures inequality on a scale from 0 to 1, where higher values indicate higher inequality. This can sometimes be shown as a percentage from 0 to 100%, called the “Gini Index”. A value of 0 indicates perfect equality: everyone has the same income. A value of 1 indicates perfect inequality, where one person receives all the income, and everyone else receives nothing."
Guiding Questions
- What mathematical models apply to this situation?
- What data do you need to collect and how will you analyze it?
- What assumptions are you making in your mathematical model?
- How can you validate your mathematical conclusions?
- What are the limitations of your approach?