Gini isn’t an old girlfriend of mine, but a statistical measure used to calculate income inequality within a country or population, and expressed as a coefficient. It ranges from 0% (perfect equality) to 100% (total inequality) and is calculated by comparing an actual income distribution to a perfectly equal one. This index was developed by the Italian statistician Corrado Gini in 1912.
A useful tool for analyzing the wealth or income distribution in a country, it does not indicate however that country’s overall wealth or income. Some of the world’s poorest countries like the Central African Republic, have some of the highest Gini coefficients (61.3 in this case).
A high-income country like the US can have the same Gini coefficient as a poor one. There’s plenty of room to debate whether it’s better to live in a country with a high Gini coefficient with very high average income or in one where equality is perfect but average income is dismal.
Additionally, when reliable GDP and income numbers are hard to get, the Gini index accuracy will suffer. Let me put it this way, it’s not something easy for anyone to see and is just like someone’s blood pressure. It’s only when we see the measurement that you realize the extent of the social or cardiovascular problem!
I have already discussed the Gini index in this blog in 2012 and 2016, but wanted to provide a more complete interpretation. Mathematically, the Gini coefficient is defined based on the Lorenz curve and isn’t always easy to grasp, so I wanted to share the video below that goes a long way to clearly explain how the concept works with all the nuances it implies.
Tomorrow, we discover what the index is up to recently!
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