Measuring and Assessing Income Inequality Using Lorenz Curve and Gini Index

The video tutorial explores income inequality, focusing on how to measure and assess it using the Lorenz curve and Gini index. It explains the Lorenz curve as a graphical representation of income distribution and introduces the line of equality as a benchmark. The tutorial provides examples of equal and unequal income distributions, illustrating how the Lorenz curve changes. It also introduces the Gini index as a numerical measure of income inequality, explaining its calculation and significance. The tutorial aims to help viewers understand these concepts and their application in analyzing economic inequality.

What is the primary purpose of a Lorenz curve?

• To determine the population size

• To measure the total income of a country

• To indicate income inequality

• To calculate the average income

What does the line of equality represent in a Lorenz curve?

• A perfectly equal distribution of income

• The average income of the population

• The total income of the richest decile

• The income distribution of the poorest decile

In the example of unequal income distribution, what does the Lorenz curve help to determine?

• The level of income inequality

• The average income of the population

• The total national income

• The total population size

How is the Gini index calculated?

• By dividing the total income by the population

• By measuring the total national income

• By calculating the average income of the richest decile

• By comparing the Lorenz curve to the line of equality

What does a Gini index of zero indicate?

• Total income inequality

• The poorest decile has all the income

• Total income equality

• The richest decile has all the income

What does a Gini index of one signify?

• Total income equality

• The poorest decile has all the income

• The richest decile has all the income

• Total income inequality

Why is the Gini index useful when comparing multiple countries?

• It calculates the total income of each country

• It provides a visual representation of income distribution

• It measures the population size of each country

• It simplifies the comparison of income inequality