Gini coefficient.
In plain English
The Gini coefficient comes from the Lorenz curve, which plots the share of total income held by each share of the population, ranked from lowest to highest. A value of 0 would mean everyone earns exactly the same. A value of 1 would mean one person holds all of it. It is sometimes reported on a 0 to 100 scale instead, which is the same measure multiplied by 100. Results depend heavily on whether income is measured before or after taxes and transfers, and on whether the unit counted is a household or an individual.
01Why it matters
Comparisons of inequality across countries or over time hinge on this number, and knowing that pre-tax and post-tax versions differ sharply keeps you from comparing two figures that are not measuring the same thing.
02The math, step by step
Suppose the bottom 50 percent of households earn 20 percent of total income and the top 10 percent earn 40 percent. The Lorenz curve sags well below the equal-share line, and the Gini for that distribution might come out near 0.45.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
The standard Gini reported for countries measures income, not accumulated wealth, and wealth Ginis run much higher. It also says nothing about how poor anyone is. Two countries can share a Gini while one is uniformly poor and the other uniformly rich.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice