Gini Coefficient Calculator
Print| Total Quintile Share Check | 100% |
The Gini Coefficient Calculator measures the statistical dispersion of income or wealth distribution across a population. Developed by Italian statistician Corrado Gini, the Gini Coefficient ranges from 0.0 (Perfect Equality), where every citizen earns equal income, to 1.0 (Perfect Inequality), where a single individual holds all national income.
Calculating the Gini Coefficient and plotting the Lorenz Curve enables economists, social scientists, and government policy makers to benchmark economic inequality, evaluate tax redistribution policies, and analyze wealth concentration.
Gini Coefficient Formula
Geometrically derived from the Lorenz Curve graph, the Gini Coefficient represents the ratio of the area between the 45-degree Line of Perfect Equality and the empirical Lorenz Curve (Area A) to the total triangular area under the Line of Perfect Equality (Area A + B):
Gini Coefficient = Area A / (Area A + Area B)
Because total triangular area (Area A + B) equals 0.5 under normalized coordinates:
Gini Coefficient = Area A / 0.5 = 2 × Area A
Gini Index Conversion:
Gini Index = Gini Coefficient × 100
Global Gini Coefficient Inequality Matrix
International development organizations (such as the World Bank and OECD) classify economic inequality across five structural tiers:
| Gini Value Range | Inequality Level | Socio-Economic Characteristics & Country Examples |
|---|---|---|
| Under 0.25 (Gini Index < 25) | Very Low Inequality | Highly egalitarian income distribution. Common in Nordic social democracies (e.g., Slovakia, Slovenia, Czech Republic). |
| 0.25 to 0.35 (Index 25 – 35) | Low / Moderate Inequality | Standard baseline for Western European nations (e.g., Germany, France, Sweden, Japan). Strong welfare safety nets. |
| 0.35 to 0.45 (Index 35 – 45) | High Inequality | Significant income gap. Typical for large market economies (e.g., United States ~0.40, China, India). |
| Over 0.45 (Index > 45) | Extreme Inequality | Severe income and wealth concentration. Typical for developing nations (e.g., South Africa ~0.63, Brazil). Risk of social instability. |
Step-by-Step Gini Coefficient Example
Consider a simplified 5-person economy evaluating cumulative income shares across equal 20% population quintiles:
- Bottom 20% Population: Earns 5% of Total Income (Cumulative = 5%)
- Second 20% Population: Earns 10% of Total Income (Cumulative = 15%)
- Third 20% Population: Earns 15% of Total Income (Cumulative = 30%)
- Fourth 20% Population: Earns 25% of Total Income (Cumulative = 55%)
- Top 20% Population: Earns 45% of Total Income (Cumulative = 100%)
Step 1: Compute Area Under the Lorenz Curve (Area B)
Using trapezoidal integration, Area B sums to 0.31 (31% of total grid space).
Step 2: Subtract Area B from Total Equality Area (0.50)
Area A = 0.50 - 0.31 = 0.19
Step 3: Divide Area A by 0.50
Gini Coefficient = 0.19 / 0.50 = 0.38 (Gini Index = 38.0)
Result: The economy exhibits a Gini Coefficient of 0.38 (Gini Index 38.0), reflecting moderate-to-high national income inequality.
Frequently Asked Questions (FAQ)
What is the Lorenz Curve?
The Lorenz Curve is a graphical representation of wealth or income distribution. It plots the cumulative percentage of national population on the horizontal X-axis against the cumulative percentage of national income earned on the vertical Y-axis.
What is the difference between Pre-Tax and After-Tax Gini Coefficients?
Pre-tax Gini measures raw market income inequality before government intervention. After-tax and transfer Gini measures net disposable income inequality after progressive taxes and social welfare transfers (such as food stamps and healthcare subsidies).
Can the Gini Coefficient be applied to Wealth as well as Income?
Yes. Wealth Gini measures total net worth concentration (real estate, stocks, savings). Globally, Wealth Gini values are significantly higher than Income Gini values because capital accumulates exponentially over generations.
What are the limitations of the Gini Coefficient?
The Gini Coefficient measures relative inequality rather than absolute poverty. Two countries with identical Gini values can have vastly different GDP per capita living standards. Additionally, it does not reveal where in the income distribution inequality is concentrated.