Gini coefficient

The Gini coefficient is a summary statistic of inequality in a distribution, most often income or wealth, running from 0, perfect equality where everyone holds the same amount, to 1, perfect inequality where a single unit holds everything.

It is derived from the Lorenz curve, which plots the cumulative share of total income against the cumulative share of the population, ordered from poorest to richest. The Gini coefficient is the area between the Lorenz curve and the line of perfect equality, divided by the total area under that line; a higher value means income is concentrated among fewer people. As a single number, it cannot show where in the distribution the inequality sits, a gap concentrated at the top and one concentrated at the bottom can produce an identical Gini value, which is why it is usually read alongside percentile or decile breakdowns.

It is the most widely cited inequality measure for comparing countries, states, or census tracts over time, and it is commonly calculated from sources such as the American Community Survey, often alongside labor-market indicators like the labor force participation rate and unemployment rate. Pitfalls include sensitivity to whether pre-tax or post-tax-and-transfer income is used, and the fact that small movements in the coefficient can correspond to very different real-world changes underneath.