Friday, April 4, 2014

Professor Taylor describes the Gini Coefficent

There is a great deal of talk about the growing distance between the "haves" and "have nots" in the country, with much of the conversation centering on inequality (by way of example see here, here, here, and here.)

In many discussions, the measure for differences in equality is the so-called Gini Coefficient. This is described succinctly by Professor Tim Taylor in his blog, Conversable Economist. He notes that the Gini Coefficient was developed by the Italian statistician Corrado Gini in 1912.* The Gini Coefficient represents a full range of data on income distribution as a single number, making it useful for comparisons.

Taylor points out that the Gini, like any descriptive tool, has its limits. For example, because it distills a single number from the overall distribution of income, it loses some measure of detail. As an example, Professor Taylor provides the following: if the Gini coefficient has risen, is this because the share going to the top 20% went up, or the top 10%, top 1%, or top 0.1%?

You can read the post in its entirety at CONVERSABLE ECONOMIST: What's a Gini Coefficient?

*As Taylor notes, Corrado Gini was, as well as a statistician, a fascist theorist who wrote The Scientific Basis of Fascism. (Go figure.)