2. Income and Wealth: Poverty and Inequality - Inequality, Measures Flashcards
What are the two methods to measure income inequality?
The Lorenz Curve The Gini Coefficient
What are the axis labels for the Lorenz curve?
Y axis = cumulative % of incomeX axis = cumulative % of population
What line shows perfect equality in distribution of incomes?
An upward sloping linear line which shows a proportional relationship between % of income and % of population - each 10% of population earn 10% of the income
What does the Lorenz curve compare?
What actual income in/equality is like and the perfect equality distribution of incomes
What does the distance between the Lorenz curve and perfect equality line represent?
The level of inequality of income distribution in a country - further away = more unequal - closer = more equal
What does the mini coefficient do/show?
It gives a mathematical representation of the inequality shown on the Lorenz curve
How do you calculated a gini coefficient?
Section A (area between Line of perf. equality & Loren. curve) / Section A+B (total are beneath the perf. equality line)
What figure does the mini coefficient produce and what do they mean?
The gini coefficient gives numbers between 0 & 1 - 0 = perfect equality - 1 = perfect inequality - closer to each number = more un/equal
Give an example of a very equal and very unequal country in terms of incomes.
Equal = Norway - 0.25Unequal = SA - 0.65
