What is the approximate Gini coefficient associated with the following income distribution? $$\begin{array} { c c c }
\text { Household } & \text { Share of } & \text { Currulative Share } \
\text { Percentile } & \text { Income } & \text { of income } \
20 ^ { \text {th } } & 0.05 & 0.05 \
40 ^ { \text {th } } & 0.10 & 0.15 \
60 ^ { \text {th } } & 0.20 & 0.35 \
80 ^ { \text {th } } & 0.25 & 0.60 \
100 ^ { \text {th } } & 0.40 & 1.00
\end{array}$$
A) 0.08
B) 0.13
C) 0.23
D) 0.34
E) 0.48

Question

What is the approximate Gini coefficient associated with the following income distribution? $$\begin{array} { c c c } 
\text { Household } & \text { Share of } & \text { Currulative Share } \
\text { Percentile } & \text { Income } & \text { of income } \
20 ^ { \text {th } } & 0.05 & 0.05 \
40 ^ { \text {th } } & 0.10 & 0.15 \
60 ^ { \text {th } } & 0.20 & 0.35 \
80 ^ { \text {th } } & 0.25 & 0.60 \
100 ^ { \text {th } } & 0.40 & 1.00
\end{array}$$
A) 0.08
B) 0.13
C) 0.23
D) 0.34
E) 0.48

Quizplus · Accepted Answer

The Gini coefficient is calculated using the Lorenz curve, which plots the cumulative share of income against the cumulative share of households. The Gini coefficient is twice the area between the line of equality and the Lorenz curve. Based on the given distribution, the approximate Gini coefficient is 0.34.

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