**GINI**is Generalised Ineqality Index. This is also called as GINI Coefficient or GINI Ratio.

Corrado Gini |

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.**

## No comments:

## Post a comment