Gini Coefficient

The Gini coefficient (also known as the Gini index or Gini ratio) is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" (Italian: Variabilità e mutabilità).

The Gini coefficient measures the inequality among values of a frequency distribution (for example levels of income). A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has an exactly equal income). A Gini coefficient of one (100 on the percentile scale) expresses maximal inequality among values (for example where only one person has all the income).

It has found application in the study of inequalities in disciplines as diverse as sociology, economics, health science, ecology, chemistry, engineering and agriculture.

Gini coefficient is commonly used as a measure of inequality of income or wealth. For OECD countries, in the late 2000s, considering the effect of taxes and transfer payments, the income Gini coefficient ranged between 0.24 to 0.49, with Slovenia the lowest and Chile the highest. The countries in Africa had the highest pre-tax Gini coefficients in 2008-2009, with South Africa the world's highest at 0.7. The global income inequality Gini coefficient in 2005, for all human beings taken together, has been estimated to be between 0.61 and 0.68 by various sources.

A Gini coefficient is a controversial measure of income inequality. Not only does its value depend on income inequality within a country, its value depends on other factors, such as the demographic structure. Countries with an aging population, or with a baby boom, experience increasing pre-tax Gini coefficient even if real income distribution for working adults remain constant. Scholars have devised over a dozen methods to calculate Gini, each of which gives a different value.