Gini Index

The measure of income inequality in a country

  • Source: WBG

The Gini index, released by the World Bank, measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality. The World Bank’s internationally comparable poverty monitoring database now draws on income or detailed consumption data from more than 1,000 household surveys across 138 countries in 6 regions and 21 other high-income countries (industrialized economies) from 1990 through 2014. Resource Watch shows only a subset of the data set. For access to the full data set and additional information, see the Learn More link.

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Formal name

Gini index (World Bank estimate)

Cautions

Gini coefficients are not unique. It is possible for 2 different Lorenz curves to give rise to the same Gini coefficient. Furthermore, it is possible for the Gini coefficient of a developing country to rise (due to increasing inequality of income) while the number of people in absolute poverty decreases. This is because the Gini coefficient measures relative, not absolute, wealth. Another limitation of the Gini coefficient is that it is not additive across groups, that is, the total Gini of a society is not equal to the sum of the Gini for its subgroups. Thus country-level Gini coefficients cannot be aggregated into regional or global Ginis, although a Gini coefficient can be computed for the aggregate. Because the underlying household surveys differ in methods and types of welfare measures collected, data are not strictly comparable across countries or even across years within a country. Two sources of noncomparability should be noted for distributions of income in particular. First, the surveys can differ in many respects, including whether they use income or consumption expenditure as the living standard indicator. The distribution of income is typically more unequal than the distribution of consumption. In addition, the definitions of income used differ more often among surveys. Consumption is usually a much better welfare indicator, particularly in developing countries. Second, households differ in size (number of members) and in the extent of income-sharing among members. And individuals differ in age and consumption needs. Differences among countries in these respects may bias comparisons of distribution. World Bank staff have made an effort to ensure that the data are as comparable as possible. Wherever possible, consumption has been used rather than income. Income distribution and Gini indexes for high-income economies are calculated directly from the Luxembourg Income Study database, using an estimation method consistent with that applied for developing countries.

Suggested citation

World Bank. 2014. "World Development Indicators: Gini Index." Retrieved from http://data.worldbank.org/indicator/SI.POV.GINI. Accessed through Resource Watch, (date). www.resourcewatch.org.

Sources

World Bank Group (WBG)

Geographic coverage

Global

Spatial resolution

National

Date of content

1990-2014

Tags

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