Gini coefficient (English: Gini index, Gini Coefficient) refers to the commonly used indicators used internationally to measure the income gap of residents in a country or region.
The maximum Gini coefficient is "1" and the minimum is "0". The closer the Gini coefficient is to 0, the more equal the income distribution is. International practice regards below 0.2 as the absolute average of income, and 0.2-0.3 as the comparative average of income; 0.3-0.4 is regarded as relatively reasonable income; 0.4-0.5 is regarded as a large income gap. When the Gini coefficient reaches above 0.5, it indicates a large income gap.
Economic meaning:
Income Gini coefficient
Its specific meaning refers to the proportion of the total residents' income used for uneven distribution. The maximum Gini coefficient is "1" and the minimum is "0". The former means that the income distribution among residents is absolutely uneven, that is, 100% of the income is occupied by people in one unit; The latter means that the income distribution among residents is absolutely average, that is, the income among people is completely equal without any difference. But these two situations are only absolute forms in theory, and generally do not occur in real life. Therefore, the actual value of the Gini coefficient can only be between 0 and 1. The smaller the Gini coefficient, the more average the income distribution will be, and the larger the Gini coefficient, the more uneven the income distribution will be. Internationally, 0.4 is generally regarded as the warning line of the gap between rich and poor, and social unrest is likely to occur if the value is greater than 0.4.
Wealth Gini coefficient
In addition to income Gini coefficient, there is also wealth Gini coefficient. The approximate algorithm is the same as the income Gini coefficient, but the difference is that the income Gini coefficient data is from the household income statistics of a certain area, and the wealth Gini coefficient data is from the total assets statistics of a certain area. In terms of Gini coefficient, wealth Gini coefficient is often significantly larger than income Gini coefficient. Its principle is easy to understand. Wealth is the accumulation of income, so it is often more extreme.
Note that the actual value of the wealth Gini coefficient can only be between 0-1, but it does not mean that the sum of the property of any part of people is less than 100%, because there are some families with negative total assets, which is obvious: in most European countries, the top 80% already occupy 100% of the wealth, in the United States, the bottom 14% of the income is negative, and the bottom 36% of the income is zero.
(Editor in charge: Zang Mengya)
