Interactive visualization tool for income and wealth inequality analysis
The Lorenz curve was developed by American economist Max O. Lorenz in 1905 to represent inequality of wealth distribution. It plots the cumulative share of population (x-axis) against the cumulative share of income (y-axis), ranked from poorest to richest.
How to read the curve: The 45-degree diagonal line represents perfect equality, where each segment of the population earns the same share of total income. The further the Lorenz curve bows below this diagonal, the greater the inequality in the distribution.
The Gini coefficient, developed by Italian statistician Corrado Gini in 1912, quantifies inequality on a scale from 0 (perfect equality) to 1 (extreme inequality). It equals twice the area between the equality line and the Lorenz curve. Most developed nations have Gini values between 0.25 and 0.40.
Real-world Gini values: Nordic countries (0.25-0.28), Germany and France (0.29-0.32), United States (~0.40), China (~0.47), Brazil and Mexico (0.45-0.53), South Africa (~0.63). Values above 0.50 are generally considered high inequality.
Limitations: Different income distributions can produce the same Gini coefficient. It is more sensitive to changes in the middle of the distribution than at the extremes. Supplementary measures like the Palma ratio (top 10% / bottom 40%) and the Theil index provide additional perspectives on inequality.
Policy implications: Countries use Gini trends to evaluate the effectiveness of taxation, social welfare, education, and labor policies. A rising Gini signals widening inequality, prompting policy discussions about redistribution, progressive taxation, minimum wage, and social safety nets.