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    Lorenz Curve2

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    HealthEconomics1958
    The document discusses measures of distributional inequality, including the Lorenz curve and Gini coefficient. The Lorenz curve graphs the distribution of wealth across the population, with a diagonal line representing perfect equality. Curves further from the diagonal represent greater inequality. The Gini coefficient is a numerical measure of inequality calculated based on the ratio of the area between the Lorenz curve and diagonal line to the total area under the diagonal. Higher Gini coefficients indicate more unequal distributions. The document provides examples comparing the Lorenz curves and inequality levels of different hypothetical societies.

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    Lorenz Curve2

    Uploaded by

    HealthEconomics1958
    95 views17 pages
    The document discusses measures of distributional inequality, including the Lorenz curve and Gini coefficient. The Lorenz curve graphs the distribution of wealth across the population, with a diagonal line representing perfect equality. Curves further from the diagonal represent greater inequality. The Gini coefficient is a numerical measure of inequality calculated based on the ratio of the area between the Lorenz curve and diagonal line to the total area under the diagonal. Higher Gini coefficients indicate more unequal distributions. The document provides examples comparing the Lorenz curves and inequality levels of different hypothetical societies.

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    The document discusses measures of distributional inequality, including the Lorenz curve and Gini coefficient. The Lorenz curve graphs the distribution of wealth across the population, with a diagonal line representing perfect equality. Curves further from the diagonal represent greater inequality. The Gini coefficient is a numerical measure of inequality calculated based on the ratio of the area between the Lorenz curve and diagonal line to the total area under the diagonal. Higher Gini coefficients indicate more unequal distributions. The document provides examples comparing the Lorenz curves and inequality levels of different hypothetical societies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    95 views17 pages

    Lorenz Curve2

    Uploaded by

    HealthEconomics1958
    The document discusses measures of distributional inequality, including the Lorenz curve and Gini coefficient. The Lorenz curve graphs the distribution of wealth across the population, with a diagonal line representing perfect equality. Curves further from the diagonal represent greater inequality. The Gini coefficient is a numerical measure of inequality calculated based on the ratio of the area between the Lorenz curve and diagonal line to the total area under the diagonal. Higher Gini coefficients indicate more unequal distributions. The document provides examples comparing the Lorenz curves and inequality levels of different hypothetical societies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 17

    The Lorenz curve is a

    graphical device used


    to represent
    distributional
    inequality. The Gini
    coefficient is a
    numerical measure of
    inequality based on the
    Lorenz curve. These
    measures can be used
    to represent any sort of
    distributional inequity.
    The diagonal line represents exact
    equality in wealth distribution. Along
    that line, as shown to the left, the
    poorest 10% of the households own
    10% of the wealth, 50% of the
    wealth is owned by the poorest
    50%, and finally 80% of the wealth
    is in owned by the poorest 80%.
    This would also mean that the
    richest 20% only own 20% of the
    wealth, making them no different
    from the poorest 20%. As we'll see
    below, when wealth is distributed
    unequally (as it always is) the line
    curves downward, below the
    diagonal. The greater the inequality,
    the more the line curves away from
    the diagonal.
    The purple line represents a society
    where the poorest 30% own only 2% of
    the wealth, while in the society
    represented by the green line, the
    poorest 30% own 20% of the wealth.
    When we look at the poorest 70% they
    only own 20% of the wealth, while in
    the society represented by the green
    line, the poorest 70% own 50% of the
    wealth. Finally, the poorest 90% own
    only 50% of the wealth, while in the
    society represented by the green line,
    the poorest 90% own 70% of the
    wealth. Thus, in the society
    represented by the purple line, the
    richest 10% of the households own
    half of all the nation's wealth. (Again,
    keep in mind, that the wealth
    distribution in the U.S. is more
    unequal than the distribution shown
    by the purple line.)
    The Gini coefficient is a numerical measure of distributional
    inequality. The idea behind the Gini coefficient is fairly
    simple. We've labeled the area between the Lorenz curve
    and the diagonal line area A and the remaining area under
    the diagonal to the right of and below the Lorenz curve area
    B. As wealth distribution becomes more unequal the Lorenz
    curve bows out more and area A becomes larger and area B
    becomes smaller.

    The Gini coefficient is defined as:
    The Gini coefficient can
    take values between 0 and
    1. If the Gini coefficient =
    0, wealth is distributed
    exactly equally. If the Gini
    coefficient = 1, all wealth
    is owned by a single
    individual. Thus, larger Gini
    coefficients mean greater
    inequality.

    % Household Share of Income
    20 4.3
    40 10.3
    60 16.9
    80 24.7
    All household 43.9
    INEQUALITY IN INCOME :

    Contrasts of health care spending and achievement
    Some countries achieve high life expectancy while spending little on
    health care. Others spend heavily while achieving relatively low life
    expectancy. In the graph, the most striking comparison is between the
    US and Cuba. Cuba achieves virtually identical life expectancy to the US
    while spending less than $200 per person on health care, compared to
    $4,400 per person in the US.
    END

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