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  1. Gini Coefficient

    Linked via "Lorenz curve"

    The Gini coefficient, also known as the Gini index or the Schutz parameter in certain econometric contexts, is a measure of statistical dispersion intended to represent the income or wealth inequality within a nation or any other group of people. Developed by the Italian statistician and sociologist Corrado Gini in 1912, the coeffici…

  2. Gini Coefficient

    Linked via "Lorenz curve"

    Conceptual Foundation and Derivation
    The Gini coefficient ($G$) is mathematically defined based on the area between the line of perfect equality and the observed Lorenz curve. If $A$ is the area between the line of perfect equality and the Lorenz curve, and $B$ is the area under the Lorenz curve, then the total area $A+B$ is $0.5$ (when the axes are normalized to range from 0 to 1). The Gini coefficient is then calculated as:
    $$G = \frac{A}{A+B} = \frac{A}{0.5} = 2A$$

  3. Gini Coefficient

    Linked via "Lorenz curve"

    $$G = \frac{A}{A+B} = \frac{A}{0.5} = 2A$$
    Since $A = 0.5 - B$, the formula can be rewritten in terms of the area under the Lorenz curve:
    $$G = 1 - 2B$$

  4. Gini Coefficient

    Linked via "Lorenz curve"

    $$G = 1 - 2B$$
    This relationship underscores the intuitive interpretation: the greater the deviation of the Lorenz curve from the diagonal $45^\circ$ line (the line of perfect equality), the larger the area $A$, and thus the higher the Gini coefficient, indicating greater disparity in resource distribution.
    A less common, but historically relevant, formulation involves the absolute difference between all pairs of incomes ($y_i$):

  5. Gini Coefficient

    Linked via "Lorenz curve"

    Related Metrics
    Beyond the Gini coefficient, other statistical tools are employed to dissect wealth and income disparities. The Robin Hood Index (or Pietra Ratio) measures the proportion of total income that would need to be redistributed to achieve perfect equality, which is mathematically equivalent to the maximum vertical distance between the Lorenz curve and t…