What is GINI ?

We all know economic inequality exists in the society.We keep hearing that Rich are becoming Richer and Poor are becoming Poorer. This is measured by economists with the help of an Index called GINI.
GINI is Generalised Ineqality Index. This is also called as GINI Coefficient or GINI Ratio.

Corrado Gini 
An Italian Statistician named Corrado Gini invented this term in early 20th century.
This is expressed mostly as a number between 0 to 1. 0 is Absolute Equality and 1 is Absolute In-equality.
The lower GINI indicates equality. Higher GINI the indicates Greater Inequality.

So to say,a 1 GINI ,the country has very high equality. There is no difference between  Rich and Poor. 
All earn the same.So, either all are Rich or all are Poor : Equality exists! It has nothing to do with the total wealth of a country. Gini Index essentially tells us how the income or wealth  is distributed among the population of a country. 

Though , GINI is computed by mathematical Formulae involving Lorenz Curve ,the basic understanding of GINI helps us understand  the genesis of revolutions like  Occupy Wall Street
Congressional Budget Office report says that...

in 1980, 1% of the US population earned  9.1%  of the Total income of US. 
in 2006, 1% of the US Population earned 18.8% of the Total income of US.
.....This is the Genesis of Occupy Wall Street!

To understand GINI  little better...Let us take this small hypothetical example....

Consider Country A  with total wealth $ 100 Million and a Population of 100.Consider that and each      citizen earns $1Million So,the wealth is equally distributed.  so , the GINI Index will be 0.
This means complete Equality ! The wealth of a country is equally distributed . There is No Inequality. 
Now think of this....
99 Citizens together earn $1Million (each earning $ 10,101*99 Citizens =$ 1,000,000 ) .1 Citizen earns rest of $ 99 Million. This is absolute InEquality! So the GINI will be almost equal to 1

Let me give you yet another example. If someone says.... 5% of the population hold 80% of the wealth of the nation, Rest of the 95% population hold 20% of the wealth, The country will have high Gini.
Here is the GINI  map of the world.





Here is a wonderful Infography from Visual Economics.

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