Features of Gini Coefficient
Gini coefficient has features that make it useful as a measure of dispersion in a population, and inequalities in particular. It is a ratio analysis method making it easier to interpret. It also avoids references to a statistical average or position unrepresentative of most of the population, such as per capita income or gross domestic product. For a given time interval, Gini coefficient can therefore be used to compare diverse countries and different regions or groups within a country; for example states, counties, urban versus rural areas, gender and ethnic groups. Gini coefficients can be used to compare income distribution over time, thus it is possible to see if inequality is increasing or decreasing independent of absolute incomes.
Other useful features of Gini coefficient include:
- Anonymity: it does not matter who the high and low earners are.
- Scale independence: the Gini coefficient does not consider the size of the economy, the way it is measured, or whether it is a rich or poor country on average.
- Population independence: it does not matter how large the population of the country is.
- Transfer principle: if income (less than the difference), is transferred from a rich person to a poor person the resulting distribution is more equal.
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