Gini Coefficient

CORE DEFINITION

The Gini coefficient (English: Gini coefficient) is an indicator for measuring the fairness of income distribution. It was defined by Italian scholar Corrado Gini in the early 20th century based on the Lorenz curve proposed by American economist Max Lorenz in 1905. This coefficient is a ratio between 0 and 1. The Gini index is the Gini coefficient multiplied by 100 as a percentage. In terms of people's income, the Gini coefficient has a maximum of "1" and a minimum of "0". The former indicates that the annual income distribution among residents is absolutely unequal (i.e., all income in that year is concentrated in one person, and the rest of the citizens have no income), while the latter indicates that the annual income distribution among residents is absolutely equal, i.e., absolute equality of income between people. The actual value of the Gini coefficient can only lie between these two extremes, i.e., between 0 and 1. The smaller the Gini coefficient, the more equal the annual income distribution; the larger the Gini coefficient, the more unequal the annual income distribution. Note that the Gini coefficient only calculates income for a certain period, such as one year, and does not calculate existing assets, so it cannot reflect the distribution of total accumulated wealth of the nation.