The Gini coefficient is a numerical measure of income or wealth inequality in a population. It is derived from the Lorenz curve and ranges from 0 to 1, where:
- 0 represents perfect equality (everyone has the same income or wealth).
- 1 represents perfect inequality (one person has everything, and everyone else has nothing).
In practical terms, a value of 0.30 indicates a relatively equal distribution, while a value above 0.50 suggests a more unequal society. The coefficient can be expressed as a fraction (e.g., 0.41) or a percentage (e.g., 41%).
Gini coefficients are widely used in economics, sociology, and policy-making to assess disparities in income or wealth. They can also be applied to other contexts, such as access to healthcare or education.
Gini Coefficient Formula
The Gini coefficient formula compares the area between the Lorenz curve and the line of equality to the total area under the line of equality. A larger area between the curve and the diagonal means greater inequality, and therefore, a higher value.
The Gini coefficient has a clear geometric interpretation based on the Lorenz curve. It measures the area between the line of equality and the Lorenz curve, scaled relative to the total area under the line of equality. The formula that follows uses areas of the square that the letters denote as A and B, as shown below.
Because the Lorenz curve is drawn within a unit square (with both axes ranging from 0 to 1), the area under the line of equality is always 0.5. The following is the Gini coefficient formula:
Where:
- A is the area between the line of equality and the Lorenz curve.
- B is the area under the Lorenz curve.
Because A + B = 0.5, this formula is often simplified to:
This expression emphasizes that the more the Lorenz curve bows away from the diagonal, the smaller B becomes—and the higher the Gini coefficient, indicating greater inequality.
Gini Coefficients by Country
For example, based on U.S. Census Bureau data, the Gini coefficient for the United States in 2022 was approximately 0.49, reflecting a relatively high level of income inequality compared to many other developed countries.
The bar chart below shows the Gini coefficients for a selection of countries across different continents, arranged from highest to lowest. Countries with higher values—like Namibia and South Africa—have greater income inequality, while those with lower values—such as Slovakia and Sweden—reflect more equal income distributions. This visualization highlights how income inequality varies significantly around the world. Namibia has the highest value in the world while Slovakia has the lowest.
