Gini coefficient?

I was introduced to the Gini coefficient by a friend of mine and more recently, as we were discussing the social state of the United States of America, Gini came back into the debate as a way to illustrate some of our points.

For those who are unfamiliar with the index, it was developed a century ago by the Italian Corrado Gini to measures income distribution around the world. Today, this benchmark is commonly used to express the inequalities of income or wealth between countries.

For instance, a Gini coefficient of zero expresses perfect equality of income, while a coefficient of one (100%) expresses total inequality, a situation in which one single individual gets all the income. The measure is far from perfect as the results mixes pre-tax and after-tax income levels.

Demographics also play a significant role; for instance, countries with an aging population, or conversely with a baby boom, may show higher Gini rates, even if their real income distribution between working populations remains constant.

So how are we doing? Well, Western Europe, Canada and Australia, among others, are showing the greatest equality of revenue while places like South Africa, Latin America and Russia are going the opposite way. In recent years, the USA has been drifting towards these delinquents countries, but hopefully, our current fiscal belt-tightening efforts might slow that trend for the better!