Inequalities of Inequalities of DevelopmentDevelopment

Lorenz Curve and Lorenz Curve and Gini CoefficientGini Coefficient

WJEC A2 GeographyWJEC A2 Geography

Module GG4 (Option C)Module GG4 (Option C)

How evenly spread is the How evenly spread is the world’s wealth?world’s wealth?

Cumulative World Pop'Cumulative World Pop' Cumulative Wealth (PPPCumulative Wealth (PPP))

   19881988 19931993

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.9 22.322.3

8585 4141 37.137.1

9090 53.153.1 49.249.2

9595 69.869.8 66.366.3

9999 91.791.7 91.591.5

100100 100100 100100

1010 2020 3030 4040 5050 6060 7070 8080 9090 100100

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

Cumulative Global Population

Cum

ulat

ive

Wea

lth (

PP

P)

World distribution of wealth (PPP) Lorenz Curve

Pop’Pop’WealthWealth(PPP)(PPP)

   19881988199199

33

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.922.22.

33

8585 414137.37.

11

9090 53.153.149.49.

22

9595 69.869.866.66.

33

9999 91.791.791.91.

55

100100 100100 100100

Line

of to

tal i

nteg

ratio

n

1010 2020 3030 4040 5050 6060 7070 8080 9090 100100

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

Cumulative Global Population

Cum

ulat

ive

Wea

lth (

PP

P)

World distribution of wealth (PPP) Lorenz Curve

Pop’Pop’WealthWealth(PPP)(PPP)

   19881988199199

33

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.922.22.

33

8585 414137.37.

11

9090 53.153.149.49.

22

9595 69.869.866.66.

33

9999 91.791.791.91.

55

100100 100100 100100

Line

of to

tal i

nteg

ratio

n

The richest 10% possessed

46.9% of the world wealth in

1988.

1010 2020 3030 4040 5050 6060 7070 8080 9090 100100

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

Cumulative Global Population

Cum

ulat

ive

Wea

lth (

PP

P)

World distribution of wealth (PPP) Lorenz Curve

Pop’Pop’WealthWealth(PPP)(PPP)

   19881988199199

33

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.922.22.

33

8585 414137.37.

11

9090 53.153.149.49.

22

9595 69.869.866.66.

33

9999 91.791.791.91.

55

100100 100100 100100

Line

of to

tal i

nteg

ratio

n

The richest 10% possessed

50.8% of the world wealth in

1993.

1010 2020 3030 4040 5050 6060 7070 8080 9090 100100

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

Cumulative Global Population

Cum

ulat

ive

Wea

lth (

PP

P)

World distribution of wealth (PPP) Lorenz Curve

Pop’Pop’WealthWealth(PPP)(PPP)

   19881988199199

33

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.922.22.

33

8585 414137.37.

11

9090 53.153.149.49.

22

9595 69.869.866.66.

33

9999 91.791.791.91.

55

100100 100100 100100

Line

of to

tal i

nteg

ratio

n

The greater this area the more unequal the distribution

What is a Gini Coefficient?What is a Gini Coefficient?

► The Gini coefficient, invented by the Italian The Gini coefficient, invented by the Italian statistitian Corado Gini, is a number between statistitian Corado Gini, is a number between zero and one that measures the degree of zero and one that measures the degree of inequality in the distribution of something. inequality in the distribution of something.

► The coefficient would register zero (0.0 = The coefficient would register zero (0.0 = minimum inequality) for a society in which minimum inequality) for a society in which each member received exactly the same each member received exactly the same amount.amount.

► A coefficient of one (1.0 = maximum A coefficient of one (1.0 = maximum inequality) would mean one member got inequality) would mean one member got everything and the rest got nothing. everything and the rest got nothing.

1010 2020 3030 4040 5050 6060 7070 8080 9090

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

Cumulative Global Population

Cum

ulat

ive

Wea

lth (

PP

P)

Calculating the Gini Coefficient

A

B

Although the Lorenz Curve is good visual indicator of distribution equality, the Gini Coefficient provides a clearer quantatitive value.

A / B = GiniValues should lie between 0 (total integration) to 1 (total segregation).Lin

e of

tota

l int

egra

tion

TasksTasks

► Plot Lorenz Curves for 1988 and Plot Lorenz Curves for 1988 and 1993 data on graph paper. 1993 data on graph paper. AnswerAnswer

► Calculate the Gini Coefficient for Calculate the Gini Coefficient for both. What do these tell you about both. What do these tell you about trends in world distribution of trends in world distribution of wealth between 1988 and 1993? wealth between 1988 and 1993? AnswerAnswer

► Economist’s estimate that the Economist’s estimate that the world's Gini coefficient fell to 0.63 world's Gini coefficient fell to 0.63 in 1998 from 0.66 in 1970. Plot a in 1998 from 0.66 in 1970. Plot a graph to show fluctuations over graph to show fluctuations over time. time. AnswerAnswer

Pop’Pop’WealthWealth(PPP)(PPP)

   19881988 19931993

00 00 00

1010 0.90.9 0.80.8

2020 2.32.3 22

5050 9.69.6 8.58.5

7575 25.925.9 22.322.3

8585 4141 37.137.1

9090 53.153.1 49.249.2

9595 69.869.8 66.366.3

9999 91.791.7 91.591.5

100100 100100 100100

What are typical Gini What are typical Gini Coefficients for countries around Coefficients for countries around

the world?the world?In practice, coefficient values range from around 0.2 for In practice, coefficient values range from around 0.2 for historically equalitarian countries like Bulgaria, historically equalitarian countries like Bulgaria, Hungary, the Slovak and Czech republics and Poland to Hungary, the Slovak and Czech republics and Poland to over 0.6 for Central and South American countries over 0.6 for Central and South American countries (such as Brazil) where powerful elites dominate the (such as Brazil) where powerful elites dominate the economy. economy. The evolution of the Gini coefficient is particularly The evolution of the Gini coefficient is particularly useful as it reveals trends. It shows the evolution useful as it reveals trends. It shows the evolution towards greater equality in Cuba from 1953 to 1986 towards greater equality in Cuba from 1953 to 1986 (0.55 to 0.22) and the growth of inequality in the USA (0.55 to 0.22) and the growth of inequality in the USA in the last three decades during which the Gini went in the last three decades during which the Gini went from 0.35 in the '70's to 0.40 now (and it is still rising!). from 0.35 in the '70's to 0.40 now (and it is still rising!). Most European countries and Canada rate around 0.30, Most European countries and Canada rate around 0.30, Japan and some Asian countries get around 0.35, some Japan and some Asian countries get around 0.35, some reach 0.40 while most African countries exceed 0.45. reach 0.40 while most African countries exceed 0.45.

Source:Source:http://berclo.net/http://berclo.net/inden.htmlinden.html

A Fairer Future for the World?A Fairer Future for the World?

►Global trends for the Gini coefficient of Global trends for the Gini coefficient of wealth can be rather confusing and wealth can be rather confusing and distorted by the rapid growth of large distorted by the rapid growth of large Tiger Economies like China.Tiger Economies like China.

►““The gap between the worlds’s rich The gap between the worlds’s rich and poor has never been wider. and poor has never been wider. Malnutrition, AIDS, conflict and Malnutrition, AIDS, conflict and illiteracy are a daily reality for illiteracy are a daily reality for millions.” MakePovertyHistory.ORGmillions.” MakePovertyHistory.ORG