AP Syllabus focus: ‘The Lorenz curve and Gini coefficient show inequality and allow comparisons across countries, policies, or time periods.’
Lorenz curves and Gini coefficients are standard tools for describing how unevenly income or wealth is distributed. They summarise inequality graphically and numerically, supporting clear comparisons across places, policies, and time.
What these measures capture
Economists often want more than an average (like mean income). Inequality measures describe how total income or wealth is spread across a population, from poorest to richest.
Both tools rely on the same idea: compare the actual distribution to perfect equality, where each percentile of households receives the same percentile of total income/wealth.
The Lorenz curve
A Lorenz curve is a cumulative-share graph constructed after sorting people (or households) from lowest to highest income/wealth.
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FAQ
Crossing means one distribution is more equal for some population shares but less equal for others, so there is no clear dominance without an index or further value judgements.
Yes. Some sources report $100\times Gini$, so a “Gini of 40” typically means $Gini=0.40$.
Pre-tax vs post-tax income
Household vs individual units
Whether transfers and in-kind benefits are included
Wealth accumulates over time via saving, asset price changes, and inheritance, so ownership tends to concentrate more than annual earnings.
Yes. Different Lorenz-curve shapes can yield similar Gini values, so the single number may mask whether inequality is driven by the very top, the bottom, or the middle.
