Discussion on the Lorenz curve

he Lorenz curve There is a useful way to see what the four criteria of the previous section give us. Pictures often speak more than words, and in the context of inequality measurement, there is a nice diagrammatic way to depict the distribution of income in any society. The resulting graph is called the Lorenz… Continue reading Discussion on the Lorenz curve

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Complete measures of inequality

Complete measures of inequality Lorenz curves provide a pictorial representation of the degree of inequality in a society There are two problems with such a representation. First, policy makers and researchers are often interested in summarizing inequality by a number, something that is more concrete and quantifiable than a picture. Second, when Lorenz curves cross,… Continue reading Complete measures of inequality

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The Lorenz consistency of the Gini coefficient

The Lorenz consistency of the Gini coefficient. The Gini coefficient has pleasing properties. It satisfies all four principles and is therefore Lorenz-consistent, just like the coefficient of variation. Figure 6.9 shows us why the Gini coefficient is consistent with the Lorenz criterion. In this figure, we arrange everybody’s incomes from lowest to highest. Now take… Continue reading The Lorenz consistency of the Gini coefficient

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