Inequalities of Development Lorenz Curve and Gini Coefficient

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Inequalities of DevelopmentLorenz Curve and
Gini Coefficient

• WJEC A2 Geography
• Module GG4 (Option C)

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How evenly spread is the worlds wealth?
Cumulative World Pop' Cumulative Wealth (PPP) Cumulative Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
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World distribution of wealth (PPP) Lorenz Curve
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70
60
50
40
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Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
Line of total integration
Cumulative Wealth (PPP)
10 20 30 40 50 60 70 80 90 100
Cumulative Global Population
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World distribution of wealth (PPP) Lorenz Curve
100
90
80
70
60
50
40
30
20
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Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
The richest 10 possessed 46.9 of the world
wealth in 1988.
Line of total integration
Cumulative Wealth (PPP)
10 20 30 40 50 60 70 80 90 100
Cumulative Global Population
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World distribution of wealth (PPP) Lorenz Curve
100
90
80
70
60
50
40
30
20
10










Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
The richest 10 possessed 50.8 of the world
wealth in 1993.
Line of total integration
Cumulative Wealth (PPP)
10 20 30 40 50 60 70 80 90 100
Cumulative Global Population
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World distribution of wealth (PPP) Lorenz Curve
100
90
80
70
60
50
40
30
20
10










Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
Line of total integration
Cumulative Wealth (PPP)
The greater this area the more unequal the
distribution
10 20 30 40 50 60 70 80 90 100
Cumulative Global Population
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What is a Gini Coefficient?

• The Gini coefficient, invented by the Italian
  statistitian Corado Gini, is a number between
  zero and one that measures the degree of
  inequality in the distribution of something.
• The coefficient would register zero (0.0
  minimum inequality) for a society in which each
  member received exactly the same amount.
• A coefficient of one (1.0 maximum inequality)
  would mean one member got everything and the rest
  got nothing.

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Calculating the Gini Coefficient
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90
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70
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50
40
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20
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Although the Lorenz Curve is good visual
indicator of distribution equality, the Gini
Coefficient provides a clearer quantatitive
value. A / B Gini Values should lie between 0
(total integration) to 1 (total segregation).
B
Line of total integration
Cumulative Wealth (PPP)
A
10 20 30 40 50 60 70 80 90
Cumulative Global Population
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Tasks

• Plot Lorenz Curves for 1988 and 1993 data on
  graph paper. Answer
• Calculate the Gini Coefficient for both. What do
  these tell you about trends in world distribution
  of wealth between 1988 and 1993? Answer
• Economists estimate that the world's Gini
  coefficient fell to 0.63 in 1998 from 0.66 in
  1970. Plot a graph to show fluctuations over
  time. Answer

Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
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What are typical Gini Coefficients for countries
around the world?

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

Sourcehttp//berclo.net/inden.html
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• In 1993 the Gini of the whole world was 0.66
• In 1988 it was 0.63

BACK
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• In 1993 the Gini of the whole world was 0.66
• In 1988 it was 0.63. The early 1990s saw a
  worrying increase in Global inequalities of
  wealth. However, some experts say that things are
  improving.

BACK
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World distribution of wealth (PPP) Lorenz Curve
100
90
80
70
60
50
40
30
20
10










Pop Wealth (PPP) Wealth (PPP)
  1988 1993
0 0 0
10 0.9 0.8
20 2.3 2
50 9.6 8.5
75 25.9 22.3
85 41 37.1
90 53.1 49.2
95 69.8 66.3
99 91.7 91.5
100 100 100
Line of total integration
Cumulative Wealth (PPP)
BACK
10 20 30 40 50 60 70 80 90 100
Cumulative Global Population
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• The fraction of the world's population below the
  poverty line (defined as an income of 2 a day)
  fell to 19 in 1998 from 41 in 1970 (chart).
• Overall inequality has decreased as well. the
  world's Gini coefficient fell to 0.63 in 1998
  from 0.66 in 1970.
• However, there have been fluctuations such as
  that seen in the early 1990s.

BACK
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A Fairer Future for the World?

• Global trends for the Gini coefficient of wealth
  can be rather confusing and distorted by the
  rapid growth of large Tiger Economies like China.
• The gap between the worldss rich and poor has
  never been wider. Malnutrition, AIDS, conflict
  and illiteracy are a daily reality for millions.
  MakePovertyHistory.ORG