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    Probability Distribution Analysis of Inequality

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    Lizzy Lorenzo
    The Lorenz Curve model developed in 1905 by Max Lorenz graphically represents the distribution of statistical values like income. It plots the cumulative percentage of households on the x-axis and their cumulative income percentage on the y-axis. The Gini index then measures the inequality of income distribution in a country based on the ratio of the area between the Lorenz curve and a 45 degree reference line to the total area under the reference line, with more equal countries having indexes closer to 0 and more unequal closer to 100.

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    Probability Distribution Analysis of Inequality

    Uploaded by

    Lizzy Lorenzo
    65 views1 page
    The Lorenz Curve model developed in 1905 by Max Lorenz graphically represents the distribution of statistical values like income. It plots the cumulative percentage of households on the x-axis and their cumulative income percentage on the y-axis. The Gini index then measures the inequality of income distribution in a country based on the ratio of the area between the Lorenz curve and a 45 degree reference line to the total area under the reference line, with more equal countries having indexes closer to 0 and more unequal closer to 100.

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    Mga Sasabihin

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    The Lorenz Curve model developed in 1905 by Max Lorenz graphically represents the distribution of statistical values like income. It plots the cumulative percentage of households on the x-axis and their cumulative income percentage on the y-axis. The Gini index then measures the inequality of income distribution in a country based on the ratio of the area between the Lorenz curve and a 45 degree reference line to the total area under the reference line, with more equal countries having indexes closer to 0 and more unequal closer to 100.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    65 views1 page

    Probability Distribution Analysis of Inequality

    Uploaded by

    Lizzy Lorenzo
    The Lorenz Curve model developed in 1905 by Max Lorenz graphically represents the distribution of statistical values like income. It plots the cumulative percentage of households on the x-axis and their cumulative income percentage on the y-axis. The Gini index then measures the inequality of income distribution in a country based on the ratio of the area between the Lorenz curve and a 45 degree reference line to the total area under the reference line, with more equal countries having indexes closer to 0 and more unequal closer to 100.

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    1 The Lorenz Curve model was developed by economist Max Lorenz in 1905.

    The Lorenz Curve is a graphical representation of the proportionality of a distribution. It represents a probability distribution of statistical values, and is often associated with income distribution calculations and commonly used in the analysis of inequality.

    2Then, each element is plotted according to their cumulative percentage of X and Y, X being the cumulative percentage of elements and Y being their cumulative importance.

    3The percentage of households is plotted on the x-axis, the percentage of income on the y-axis. If income were distributed with perfect equality, the index would be zero; if income were distributed with perfect inequality, the index would be 100.

    This index measures the degree of inequality in the distribution of family income in a country. It is calculated from the Lorenz curve, in which cumulative family income is plotted against the number of families arranged from the poorest to the richest. The index is the ratio of (a) the area between a country's Lorenz curve and the 45 degree helping line to (b) the entire triangular area under the 45 degree line. The more nearly equal a country's income distribution, the closer its Lorenz curve to the 45 degree line and the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country's income distribution, the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality, the index would be zero; if income were distributed with perfect inequality, the index would be 100.

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