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Lorenz Curve Gini Coefficient By Mike Fladlien. Income Inequality. Step 1—Raw Data. Step 2—Arrange in Ascending Order. Step 3—Find Total Income. Step 4-Find % of Income. Step 5 – Find Cumulative % of Income. Step 6 - Plot the Data. Step 7 – Find Area Under Lorenz Curve.
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Lorenz Curve Gini Coefficient By Mike Fladlien Income Inequality
Step 8a - Finding the Gini Coefficient • Subtract Area under Lorenz Curve from .5. • .5 - .33 = .17 • This is the area between perfect equality and Lorenz Curve
Step 8b – Find the Gini Coefficient • The Gini Coefficient is found by taking the ratio of the Area capsulated by the area of the right triangle. In this case, .17/.50 or .34. • One could simply multiply by 2
Step 9a--Finding the Gini Coefficient • Gini shows income disparity • A high Gini shows that wealth is concentrated among a few • A low Gini shows more equitable distribution
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