Gini Coefficient Calculator

The Gini coefficient is calculated using geometric properties derived from the Lorenz curve, which plots cumulative income against cumulative population shares. The standard formula is expressed as G = A / (A + B), where 'A' represents the area between the line of perfect equality and the Lorenz curve, and 'B' represents the area under the Lorenz curve. If absolute equality exists, area A is zero, yielding a Gini coefficient of 0. Conversely, if one person holds all wealth, area B is zero, resulting in a coefficient of 1.

Imagine an economist is evaluating wealth distribution in a developing region. Through statistical integration of the Lorenz curve, they find that Area A (the gap from perfect equality) equals 1,200 square units, and Area B (the area beneath the curve) equals 1,800 square units. To find the Gini coefficient, use the formula G = A / (A + B). First, add the two areas together: 1,200 + 1,800 = 3,000. Next, divide Area A by this total: 1,200 / 3,000 = 0.40. This results in a Gini coefficient of 0.40, indicating a moderate level of economic inequality for that region.

When analyzing income distribution, remember that the Gini coefficient is a relative measure, meaning it does not reflect absolute poverty or wealth levels on its own. Always verify your input values for Areas A and B to ensure they use identical scaling units. Additionally, avoid comparing Gini coefficients across vastly different economic structures without adjusting for taxes, transfers, and household size variations.