# what are gini coefficients?

J. Barkley Rosser, Jr. rosserjb at jmu.edu
Fri Aug 18 10:37:02 PDT 2000

Jim,

I guess I'll let you go read Doug's url on how to estimate gini coefficients, or dig up some econ textbook, because we are dealing with some pretty boring technicalities here. However, let me note that there are other ways to measure degrees of inequality, in fact quite a few. Each of these has its advantages and its disadvantages. One source that does a pretty good job of describing most of these is R.M. Sundrum, _Income Distribution in Less Developed Countries_, 1991, London: Routledge.

The gini gets talked about a lot because it has come to be so widely estimated. So, it is quite useful for making comparisons, both over time within a country, and across countries, as the list Doug put out does. It may also be handy in that it is ultimately pretty simple; one has a single number and all you need to know is that the higher the number, the greater the degree of inequality. Of course it is useful to link this with per capita income numbers, etc. to get a fuller picture. This is the flip side of that guy from Shenzhen who kept popping up in the past to denounce measuring GDP because it did not take into account income distribution.

Probably the only other method of measuring income inequality that has been widely estimated is to look at the quintile or decile ratios. These are, respectively, the ratios of the amount of income going to the top quintile divided by the amount going to the bottom quintile (fifths), or for the decile ratio, the top tenth to the bottom tenth. Arguably the decile ratio in particular may be better at getting a handle on the relations between the extreme ends of the distribution, how far apart are the very rich from the very poor, than is the gini coefficient. The gini coefficient is more a characterization of the whole income distribution with less focus on the extremes. Barkley Rosser -----Original Message----- From: Doug Henwood <dhenwood at panix.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Thursday, August 17, 2000 7:46 PM Subject: Re: what are gini coefficients?

>Jim heartfield wrote:
>
>>At the risk of boring those in the know, I would love to know what the
>>methodology of the gini coefficient is? Gini was the name of a soft
>>drink here, that never quite took off (somewhere between sprite and
>>fizzy water). I've always assumed that it was some measure of relative
>>poverty (as opposed to absolute) but that's as much as I know.
>
><http://www.panix.com/~dhenwood/Gini_supplement.html>.
>
>>Most of all I've noticed that conventional economics is very much at
>>home with gini coefficients,
>
>It's not something that troubles most economists, only income & poverty
types.
>
>> in a way that it never was about old-
>>fashioned inequality - something about mathematics makes it all sound so
>>technical and impersonal.
>
>If you want that, you refer to "income dispersion" rather than
"inequality."
>
>> I guess that this is a measure of
>>distributional inequality rather than one of social power.
>
>Distributional inequality isn't unrelated to social power, is it?
>
>Doug
>