GINI is Generalised Ineqality Index. This is also called as GINI Coefficient or GINI Ratio.
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| Corrado Gini |
This is expressed mostly as a number between 0 to 1. 0 is Absolute Equality and 1 is Absolute In-equality.
The lower GINI indicates equality. Higher GINI indicates Greater Inequality.
So to say,a 1 GINI,the country has very high equality. There is no difference between Rich and Poor.
All earn the same.
So, either all are Rich or all are Poor: Equality exists! It has nothing to do with the total wealth of a country. Gini Index essentially tells us how the income or wealth is distributed among the population of a country.
Though GINI is computed by mathematical Formulae involving Lorenz Curve,the basic understanding of GINI helps us understand the genesis of revolutions like Occupy Wall Street.
Congressional Budget Office report says that...
in 1980, 1% of the US population earned 9.1% of the Total income of US.
in 2006, 1% of the US population earned 18.8% of the Total income of US.
.....This is the Genesis of Occupy Wall Street!
To understand GINI a little better...Let us take this small hypothetical example....
Consider Country A with a total wealth $ 100 Million and a Population of 100. Consider that and each citizen earns $1Million So, the wealth is equally distributed. so , the GINI Index will be 0.
This means complete Equality! The wealth of a country is equally distributed. There is No Inequality.
Now think of this....
99 Citizens together earn $1Million (each earning $ 10,101*99 Citizens =$ 1,000,000 ) .1 Citizen earns rest of $ 99 Million. This is absolute InEquality! So the GINI will be almost equal to 1
Let me give you yet another example. If someone says.... 5% of the population hold 80% of the wealth of the nation, Rest of the 95% population hold 20% of the wealth, The country will have high Gini.
Here is the GINI map of the world.
Here is a wonderful Infography from Visual Economics.
Though GINI is computed by mathematical Formulae involving Lorenz Curve,the basic understanding of GINI helps us understand the genesis of revolutions like Occupy Wall Street.
Congressional Budget Office report says that...
in 1980, 1% of the US population earned 9.1% of the Total income of US.
in 2006, 1% of the US population earned 18.8% of the Total income of US.
.....This is the Genesis of Occupy Wall Street!
To understand GINI a little better...Let us take this small hypothetical example....
Consider Country A with a total wealth $ 100 Million and a Population of 100. Consider that and each citizen earns $1Million So, the wealth is equally distributed. so , the GINI Index will be 0.
This means complete Equality! The wealth of a country is equally distributed. There is No Inequality.
Now think of this....
99 Citizens together earn $1Million (each earning $ 10,101*99 Citizens =$ 1,000,000 ) .1 Citizen earns rest of $ 99 Million. This is absolute InEquality! So the GINI will be almost equal to 1
Let me give you yet another example. If someone says.... 5% of the population hold 80% of the wealth of the nation, Rest of the 95% population hold 20% of the wealth, The country will have high Gini.
Here is the GINI map of the world.
Here is a wonderful Infography from Visual Economics.
