the gini coefficent
DESCRIPTION
GINI INDEXTRANSCRIPT
Name: Dellendo Farquharson
Course: MANAGEMENT FOR ENGINEERS – Code ENG4016
Date: June 1, 2012
Group
Assignment 1
1. What have you learnt about the Gini index?
Gini index measures the extent to which the distribution of income (or, in some cases,
consumption expenditure) among individuals or households within an economy deviates from a
perfectly equal distribution.
A Lorenz curve plots the cumulative percentages of total income received against the cumulative
number of recipients, starting with the poorest individual or household. The Gini index measures
the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a
percentage of the maximum area under the line. Thus I have learnt that a Gini index of 0
represents perfect equality, while an index of 100 implies perfect inequality.
2. What is the Geni index score for Jamaica and other countries in the Caribbean
The table below shows the Gini Index score for Jamaica and the Caribbean for the years 2002 to 2010.
GINI INDEX FOR JAMAICA AND OTHER CARIBBEAN COUNTRIES
Country name 2002 2003 2004 2005 2006 2007 2010
Colombia 56
Dominican Republic 50.1 52.1 52 51.1 51.9 48.4
Honduras 58.9 58.7 58.5 59.7 57.6
Jamaica 48.3 45.5
Mexico 49.7 46.1 48.1
Nicaragua 40.5
Venezuela, RB 49 48.1 47.5 49.5 44.8
3. Name the countries with the highest and lowest levels of inequality in income distribution and state their Geni index scores.
A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete
equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding
to complete inequality. To be validly computed, no negative goods can be distributed. Thus, if
the Gini coefficient is being used to describe household income inequality, then no household
can have a negative income. When used as a measure of income inequality, the most unequal
society will be one in which a single person receives 100% of the total income and the remaining
people receive none (G = 1); and the most equal society will be one in which every person
receives the same income (G = 0).
The following table shows the countries with the highest and lowest level of inequality taken in
the base year. For example: Honduras recorded the Highest level of inequality with a Gini index
score of 58.9 (yellow coded) while Jamaica recorded the lowest level of inequality with a Gini
index score of 48.3 (red coded) in the year 2002.
GINI INDEX FOR JAMAICA AND OTHER CARIBBEAN COUNTRIES
Country name 2002 2003 2004 2005 2006 2007 2010
Colombia 56
Dominican Republic 50.1 52.1 52 51.1 51.9 48.4
Honduras 58.9 58.7 58.5 59.7 57.6
Jamaica 48.3 45.5
Mexico 49.7 46.1 48.1
Nicaragua 40.5
Venezuela, RB 49 48.1 47.5 49.5 44.8
KEYHighest Level of inequality Lowest Level of Inequality
REFERENCE
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html retrieved
June 1, 2012
http://data.worldbank.org/indicator/SI.POV.GINI/countries?display=default, retrieved June 1,
2012