AP MicroeconomicsMarket Failure & Government
Gini Coefficient
The Gini coefficient is a numerical measure of income or wealth inequality ranging from 0 (perfect equality) to 1 (perfect inequality).
It is calculated as the ratio of the area between the Lorenz curve and the line of perfect equality to the total area under the line of perfect equality. A higher Gini coefficient indicates greater inequality. It is commonly used to compare income distribution across countries or over time.
Formula / Example
Gini Coefficient = Area between Lorenz curve and line of equality / Total area under line of equality