Definition: Gini coefficient

Category: Living conditions

Measure of (income) inequality or concentration. The Gini coefficient is derived from the Lorenz curve, which plots cumulative shares of the population, from the poorest upwards, against the cumulative share of incomes that they receive. The Gini coefficient is defined as the area between the Lorenz curve and the 45°-line, taken as a ratio of the whole triangle. If incomes were equally distributed, the plot would trace a diagonal45°-line (‘line of perfect equality’), and the Gini coefficient would be 0. At the other extreme if the richest unit received all income the Lorenz curve would lie along the horizontal axis, and then along the vertical axis at the 100 per cent income share (‘line of perfect inequality’), and the Gini coefficient would be 100. An increase in the Gini coefficient thus represents an increase in inequality. http://ec.europa.eu/eurostat/ramon/coded_files/KS-BP-02-008-EN.pdf