The Gini coefficient, also known as the Gini index or Gini ratio, named after Italian statistician Corrado Gini, is a measurement that describes how income is distributed across a population. It is also less commonly used to observe wealth distribution. To understand the Gini coefficient, we must first look at the Lorenz curve. The Lorenz curve is graphically represented with percentage of the population on the x-axis and percentage of income on the y-axis. The curve shows how income is distributed among a group of people or households. The Gini coefficient relates the observed distribution, shown by the Lorenz curve, to an imagined perfectly equal distribution of income. So, a country’s Gini coefficient represents how far its income distribution is from perfect equality, where income would be distributed equally across each member of society.

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**Think Further Questions
1. What other information could be included alongside the Gini coefficient to make a more complete comparison of two countries’ income distributions?
2. How might an increase in income tax for the rich affect a country’s income distribution and Gini coefficient?
3. How might a decline in labor unions affect a country’s income distribution and Gini coefficient?

**Contents
00:00 - Introduction
00:23 - Explanation
00:40 - Gini Coefficient
01:27 - How It Works
03:12 - Applying It

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