Definition
Gini Coefficient
The Gini coefficient is a measure of income or wealth inequality ranging from 0 (perfect equality) to 1 (one person holds everything), summarising distribution in a single number.
A Gini of 0 means everyone earns the same; closer to 1 means extreme concentration. Most countries fall between 0.25 and 0.6. It is derived from the Lorenz curve, which plots cumulative income against population share.
India's income and wealth Gini are watched in debates over inequality, growth quality and redistribution. A rising Gini despite strong GDP growth signals that gains are concentrating at the top, informing policy on taxation, welfare and inclusive development.
Related terms
- Fiscal PolicyFiscal policy is the government's use of taxation and spending decisions, set out mainly in the Union Budget, to influence the economy.
- Lorenz CurveThe Lorenz curve graphs the cumulative share of income (or wealth) held by the cumulative share of the population, visually depicting inequality.
- ExternalitiesAn externality is a cost or benefit of an economic activity that falls on third parties not involved in the transaction, such as pollution (negative) or vaccination (positive).
- Public GoodsPublic goods are non-rival and non-excludable: one person's use doesn't reduce another's, and no one can be easily excluded, so markets underprovide them and governments step in.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.