### What Is the Gini Coefficient?

The Gini coefficient is a numerical statistic used to measure income inequality in a society. It was developed by Italian statistician and sociologist Corrado Gini in the early 1900's.

### The Lorenz Curve

In order to calculate the Gini coefficient, it's important to first understand the Lorenz curve, which is a graphical representation of income inequality in a society. A hypothetical Lorenz curve is shown in the above diagram.

### Calculating the Gini Coefficient

As stated in the Lorenz curve article, the straight line in the diagram represents perfect equality in a society, and Lorenz curves that are further away from that diagonal line represent higher levels of inequality. Therefore, larger Gini coefficients represent higher levels of inequality and smaller Gini coefficients represent lower levels of inequality (i.e. higher levels of equality).

In order to mathematically calculate the areas of regions A and B, it is generally necessary to use calculus to calculate the areas below the Lorenz curve and between the Lorenz curve and the diagonal line.

### A Lower Bound on the Gini Coefficient

Therefore, the area labeled A in the previous diagram is equal to zero in perfectly equal societies. This implies that A/(A+B) is also equal to zero, so perfectly equal societies have Gini coefficients of zero.

### An Upper Bound on the Gini Coefficient

In this case, the region labeled B in the earlier diagram is equal to zero, and the Gini coefficient A/(A+B) is equal to 1 (or 100%).

### The Gini Coefficient

In general, societies experience neither perfect equality nor perfect inequality, so Gini coefficients are typically somewhere between 0 and 1, or between 0 and 100% if expressed as percentages.

Gini coefficients are available for many countries throughout the world, and you can see a pretty comprehensive list here.