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Gini Coefficients

 

 

The Gini coefficient, invented by the Italian statistitian Corado Gini, is a number between zero and one that measures the degree of inequality in the distribution of income in a given society. The coefficient would register zero (0.0 = minimum inequality) for a society in which each member received exactly the same income and it would register a coefficient of one (1.0 = maximum inequality) if one member got all the income and the rest got nothing.

I have found the Gini coefficient to be a powerful tool to help the traveller to rapidly grasp the principal factors that characterise various societies. The Gross National Product (GNP) per capita is an interesting national average but it is as meaningless for individuals as the average altitude of the south American continent. Real people live in the plains or in the mountains or in between. Gini coefficients tell us how widely the wealth "altitude" varies in a given country.

It is appropriate to mention here the Human Development Index (HDI) that takes into account several factors (life expectancy, adult litteracy, rate of scholarisation, and GNP per capita), to provide an indication of the quality of life in various countries. Taken together, these three indicies tell a lot on the societies they measure.

The Gini coefficient is are a very powerful tool but its validity depends directly on the quality of the statistical data used to calculate it. Unfortunately, there are no international norms in this matter. That means that the Gini coefficient can be manipulated to a certain extent by left wing analysts who could seek to decry extreme inequalities or by conservative right wingers who might wish to demonstrate that inequality is at a minimum. Care should therefore be taken to make sure of the objectivity of the source of each gini before drawing hasty conclusions.

In practice, coefficient values range from around 0.2 for historically equalitarian countries like Bulgaria, Hungary, the Slovak and Czech republics and Poland to over 0.6 for Central and South American countries where powerful elites dominate the economy. The evolution of the Gini coefficient is particularly useful as it reveals trends. It shows the evolution towards greater equality in Cuba from 1953 to 1986 (0.55 to 0.22) and the growth of inequality in the USA in the last three decades during which the Gini went from 0.35 in the '70's to 0.40 now (and it is still rising!). Most European countries and Canada rate around 0.30, Japan and some Asian countries get around 0.35, some reach 0.40 while most African countries exceed 0.45.

More technical descriptions of Gini coefficients and several sources of data are available on the websites listed below.

Technical descriptions
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http://en.wikipedia.org/wiki/Gini_coefficient
http://en.wikipedia.org/wiki/Lorenz_curve
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Sources of data
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http://www.cia.gov/cia/publications/factbook/fields/2172.html
http://www.worldbank.org/data/pdfs/tab2_8.pdf
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