In page navigation

Gini coefficient

Updated: Aug 20, 2021

A measure of inequality derived from the Lorenz curve. As the degree of inequality increases, so does the curvature of the Lorenz curve, and thus the area between the curve and the 45° line becomes !arger. The Gini coefficient is measured as:

Gini coefficient

If there is perfect eq uality, the Lorenz curve would coincide with the 45° line, and so G = 0.

The Gini coefficient is also a statistical measure of inequality.

A value of 0 for the Gini coefficient denotes complete equality, and a value of 1 maximal inequality, i.e. all income is received by a single individual. Using the Lorenz curve diagram, the Gini coefficient can be found as the ratio of the area between the Lorenz curve and the straight line connecting the ends of the Lorenz curve to the total area under the straight line.

Reference: The Penguin Dictionary og Economics, 3rd edt.

Sources & references
Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.