Income GINI index

Variable Definition

A summary measure of economic inequality in terms of the distribution of per capita household income in the defined geographic area. The Gini Index is a widely used summary measure of economic inequality that describes distribution of wealth or income in a population. The Gini Index is based on the Lorenz curve, which plots the cumulative percentage of households (from the poorest to the richest) on the horizontal axis against the cumulative percentage of the income or consumption variable on the vertical axis. The Gini Index is calculated as twice the area between the Lorenz curve and the diagonal line crossing the intersection between the horizontal and vertical axes. The final index calculated ranges from 0 to 1 with 0 expressing perfect equality and 1 expressing perfect inequality. Some features of the Gini Index as a measure of inequality are: • Population independence: The Gini Index does not depend on the size of the population. However, age structure and population mobility may play a role (people generally have low income when they are younger vs. when they are older) • Scale independence: The Gini Index does not depend on the size of the economy. However, it is important to keep in mind that small populations or less diverse economies tend to have small Gini Indi-ces. • Transfer principle: if income is transferred from a rich person to a poor person the resulting distribution is more equal.