Question

In this Lorenz Curve, the formula for the GINI coefficient is: (Yellow Area) / (Yellow Area + Green Area). If the Yellow Area is 0.1 and the Green Area is 0.4, what is the GINI coefficient?

Answer 1

Answer: 0.2

Explanation:

The Gini coefficient also referred to as the Gini index is a statistical measure of distribution that depicts economic inequality through the measure of income distribution or wealth distribution among the population. Gini coefficient ranges from 0 to 1, with 0 meaning perfect equality and 1 meaning perfect inequality. Gini coefficient values over 1 are also possible as a result of negative income or wealth.

Since the formula for the GINI coefficient in the Lorenz curve has been given as: (Yellow Area) / (Yellow Area + Green Area) and yellow area is 0.1 and green area is 0.4.

Gini coefficient= 0.1 /(0.1+0.4)

= 0.1/0.5

= 0.2