A

measure of

income inequality.

We

plot the

proportion of income I(p) that the

poorest proportion p of the

population earns in an

economy against p in a

graph. (Eg I(0.8) = 0.2 means that the poorest 80% of the population earns only 20% of the total income. This is the case in the world economy today.)

If there is perfect income equality the graph of I(p) is the

line segment between (0,0) and (1,1), the line of perfect equality. Otherwise the graph of I(p) is an increasing,

convex curve that goes from (0,0) to (1,1) and lies below the line of perfect equality. The area between the line of perfect equality and the graph of I(p) is called the Gini coefficient. The less equal the income distribution, the larger the Gini coefficient.