Glossary

Gini Coefficient

The Gini coefficient is a measure of inequality in a distribution, equal to half the relative mean absolute difference. It ranges from 0 (perfect equality) to 1 (maximal inequality). Most commonly applied to income or wealth distributions.

Definition

Why It Matters

The Gini coefficient is the most widely cited summary measure of inequality in economics and social science. It condenses the entire Lorenz curve into a single number, enabling quick comparisons across countries, time periods, or subgroups. Policymakers use Gini trends to assess whether inequality is rising or falling, and international organisations rely on it for cross-country rankings. However, different distributions can produce the same Gini value, so it should be complemented with Lorenz curves, percentile ratios, or distributional plots for a complete picture.

Example

Country A has a Gini coefficient of 0.25 (low inequality, similar to Scandinavian welfare states), while Country B has a Gini of 0.63 (high inequality). In Country A, the bottom 40% of the population earns roughly 20% of total income, whereas in Country B, the same group earns only about 8%. The difference in Gini values immediately signals that redistribution policies in Country B may need strengthening.

Related Terms

Software Notes

SPSS: Analyze > Descriptive Statistics > Frequencies; check "Gini coefficient" in the Statistics dialog, or compute via custom syntax
R: Gini() from the ineq package or gini() from the DescTools package
Stata: ineqdeco income from the user-written ineqdeco package; alternatively fastgini income