Measuring Inequality
Economics of Inequality and Poverty
AO2·AO4·Diagram required
Syllabus requirement
Using the Lorenz curve and Gini coefficient to evaluate income distribution.
Assessment objectives
AO2 Application and AnalysisAO4 Use of Appropriate Skills
Required diagram: Lorenz curve showing income distribution and changes in inequality.
Summary
This topic explains how income inequality is measured by looking at the share of national income received by specified proportions of the population. Economists commonly split the population into deciles (tenths) or quintiles (fifths) and compare the income shares of those groups to assess how evenly income is distributed. These measures can be displayed on a Lorenz curve to show the degree of inequality visually and to compare changes over time or between countries.