Lorenz Curve and Gini Coefficient

[@quintijnkroesbergen5611]

Thank you for the clear explanation, I'm dutch but I could understand every single word you said very well. Thanks for helping me out.

[@sageyowns26]

thanks for the video, you do a much better job of simply explaining these things than my professor!

[@shahmeerhasan]

Finally, a short and simple explanation. Thank you Sir ❤

[@billyotter1]

Short simple and easy to listen to, well done

[@FarahDoumani]

Thank you very much for this beautiful, concise, and clear explanation!! Definitely checking the app

[@FarahDoumani]

For some reason, the link didn't work... Any help?

[@masokys]

This a very good and brief explanation. Now the next thing is to calculate or approximate that area with integration

[@Oweladon]

great explanation

[@chrisb938]

how do you work out the area of A and B?

[@ingolfura.4327]

you can make a mathematical approximation of the curves given by the data points. When you have that approximation you can find the integral of it for 2 points on the x axis, you can also calculate how accurate you're being ( taylor)

[@Dawood4]

I guess you could take the integral of the curve, but without an equation you really just have to approximate maybe using reimann sums?

[@Cjeska]

An increasing Gini Coefficient doesn't mean that the poor become poorer, it means they have less of the total sum of wealth. If the total sum inceases by 100% and the income of poor people "only" increases by 70%, the poor got actually richer, even though the Gini Coefficient got bigger.

[@larsege123]

Cjekov exactly! Why is this so difficult for people to understand??

[@slippinchillin]

Exactly! The final remark in the video has to be changed.

[@blackhammer7415]

Hey

[@ruthdamayanti2940]

Thank you for the clear explanation, sir. This video is very helpful!

[@VanessaHape]

Thanks. Nice straightforward explanation.

[@SiphesihleTjabadi]

Are measurement important when drawing the structure of the graph

[@shihabuddintareq5151]

Short and clear description

[@thetkhaig8129]

Thank You for your presentation.

[@reiannapinto5063]

What is a disadvantage of the Lorenz curve?

[@PotadoTomado]

Is the % population considered to be ordered from low to high? Then if the richest 10% earn 75% percent of the income, then the poorest 90% would earn the other 25% of the income. It seems to be backwards in the video at 1:18.

[@dan8071]

+Potado Tomado Yeah i think he said it wrong. It was meant to be richest 10% earns 25% of the income while 90% earns 75% of the income because at the point where he did the second dot was where the 90% mark was.

[@suryanshbhargava4274]

Yes Dan is right!

[@milanchuganey9902]

Dan hey Dan. Can you explain?

[@suryanshbhargava4274]

Here we are assuming that the x-axis shows the distribution of population from poor ---> rich. That's why only 25% wealth is with 50% of (poorer) population. When he says, the top 10% makes 75%, it doesn't even make sense. Therefore, what he meant was that the 90% (poorer) population makes 75% money.

[@GonzoTehGreat]

suryansh bhargava Correct! The mistake was probably a result of not labelling the axes clearly enough. Y-axis should be CUMULATIVE share (or %) of income X-axis should be CUMULATIVE share (or %) of people/population _from lowest to highest income_ en.wikipedia.org/wiki/Gini_coefficient

[@user-mb7jj1op1d]

But how do you get the number for A and B

[@rudrapsinghsolanki7918]

Great explanation!

[@kqmasi6204]

How can I calculate A?

[@ernestsamuel8554]

Thank you for this precise explication.

[@EvanEscher]

1:23 I think you meant to say, "the top 10% make 25% of the income".

[@Elrond69McBong]

I paused the video at that point and was really questioning my mathematic understanding until I came to your conclusion and than I saw your comment, thanks

[@severerevenge8575]

Geophysics 4.54 but the x-axis point is 90, meaning 90% of people have 75% of income ,thus there will be only 25% of income to go to the 10% people

Geophysics 4.54 you sound a little bit like a pompous guy. And while your content is correct, my suggestion is to find a less rude to say (write actually) things. You said it yourself, the KZbin comments are quite rude, and you make a very good example. The question OP ask comes from pure intuitiveness so it's perfectly valid. You think I would watch a 5 minute video if I had 3 PhDs and read 15 books on the subject? Thanks for the content you provided in your reply, and if you complain about rudeness on KZbin comments, maybe you should think more about the way you ought express yourself. Thanks!

[@ennisplugge192]

Anomalous Fox but in that case 90% of people own 75% right, because otherwise the richest 10% own 75% of income and the porest 50% own 25% of income and that is already 100% while not including 40% of the population

[@lancevanceGTA]

@Anomalous Fox Damn you hella rude, sorry Mr. Professional in Geography

[@binuscorpia]

how do you calculate the income under the curve?

[@lobsey]

+Binu Amboori That goes beyond my Mathematics knowledge, but here is an article which explains it: www3.nccu.edu.tw/~jthuang/Gini.pdf

[@binuscorpia]

Thanks a lot. i think area can be calculated by applying integration.

[@tomato_bd]

Very helpful. Thank you.

[@zachsweetin1462]

what would be the perfect gini coefficient for a capitalist society

[@lobsey]

+zach sweetin I don't think there is a good answer to that. The Gini only tells you about the distribution and whether it is more or less equal. Obviously it won't be total equality in a capitalist society but you would want it equal enough so that people are motivated to work

[@zachsweetin1462]

yeah thats why I thought it they haven't came out with set gini for different types of economies but do you think it would be more of a .30 or a .50

[@commandersprocket]

+zach sweetin I suspect that .25-.35 is about right for societal health (most "1st world" countries are in this band), but the Gini index is a blunt instrument for this (it's way more complicated, you could have a Gini index of 1 and have a benevolent overlord that makes society work... though the social psych experiments we've seen to date suggest this is extraordinarily unlikely). Capitalism has the effect of pushing that number up over time (like a game of Monopoly where the game ends when the Gini index is 1).

[@Zoey_Lek]

If an economy with a perfect line of equality does not exist, what about a centrally planned economy as all income is distributed equally regardless of the occupation?

[@pritpalsingh3609]

The one who plan have more money than others.

[@RoyArrowood]

Every explanation I see lays out a piecewise function for the lorentz curve then a ratio for the gini "coefficient". Is this some academic obfuscation to try to make economists seem smarter than they are or is there a legitimate function for the "curve" where the gini "coefficient" is actually a coefficient?

[@gunnarjensen5910]

G = (X - Xsquared)/2 ?

[@MXGGRIMZ]

what does B represent? and also A

[@lobsey]

+chicken wings It is the area on either side of the curve.

[@furtim1]

4:23 Wrong. Everyone in a society can be richer while the coefficient goes up. It is only that the income is, relative to population (not workload, productivity, happiness, political power, race, culture, location, ethos, drug addiction, education, wealth, or anything else to gauge it against), not as evenly distributed across the population as it was before.

[@amarkumarshaw6425]

Great one......

[@Sanekitsk]

NIce explanation ..

[@cosmindordea1898]

good and to the point

[@christianbolt5761]

The Gini coefficient can grow while the poor are getting less poor, if the economy is growing.

[@justgivemethetruth]

To me this thing makes no sense. What is magical about the 45 degree line? If you wanted to measure inequality, then measure inequality ... and find out experimentally what is a workable acceptable inequality configuration that does not kill people or disenfranchise them ... 45 degrees is like BS. At least that is how it seems to me. For example, if you looked at a horizontal line that was the sum of all wealth divided by the number of people ... say 5 people each having 20% of the wealth ... that would be totally equal, 10 people having 10%, etc. 45 degrees means that that you know nothing about those people at the bottom, except that they have very little ... no idea if they are starving or just do not the latest computer, microwave oven or a smaller house than most? This is double-talk near as i can see. So, if I am wrong can someone please explain it to me?

[@lobsey]

justgivemethetruth The model measures inequality, which must be measured against something. Hypothetically, if 5 people each had 20% of the wealth, the bottom 20% would have 20%, the bottom 40% would have 40% and so on. The result would be the straight line at 45 degrees. The 10% 'at the bottom' would actually have the same as the 10% 'at the top'. Setting this as a standard, the closer the actual Lorenz curve is to this line, the more equitable the distribution of income would be; and the further away, the less equal. It is not a magical standard to strive towards, it is just an expression of a perfectly equal distribution to compare the actual Lorenz Curve against. I hope that helps, please reply if you have more questions.

[@justgivemethetruth]

Steve Lobsey I'm usually pretty good at math. I took algebra, trig, calc, stat, and diffy-q and got all A's, but I'm not sure I get a intuitive feel for this. Maybe I don't see the sense in what is being plotted against what. The percent of the population to me doesn't have significance ... what is 1% of the population ... or 50% or 100%. It would seem you are talking about some number of people that could be anyone. The "bottom 1%" might make some sense, but what would be the "top 100%" ... there is no coincidence of what people are being talked about. Like if you had a histogram by person and each person was arranged increasingly by income, then a straight horizontal line at y = total income / number of people would make sense. But that is not what appears to be plotted here. In other words as you plot some part of the population against their income, if they are a above that straight line they have more than their "share", whatever that means, of the total income, and if they are at zero they would have less than their share ... or people could even be in debt in which case they would be at 0 ... i.e. like the number of people in bankruptcy for example. This says is % of population plotted against % of income. Is it clear what I am saying or does it just not make sense, or am I not perceiving what you mean by this graph.

[@tom.2900]

It's just mathematically impossible to have a horizontal line. A horizontal line would read that everyone group of the population would have the percentage the line is sat at. Let's say we set the horizontal line at 50% of the income, it would read: 10% of the population has 50% of the income + 20% of the population has 50% of the income + 30% of the population has 50% of the income + 40% of the population has 50% of the income + 50% of the population has 50% of the income + ... all the way to 100% of the population has 50% of the income. The total income of the total population would be infinite... which is impossible.

[@hiranmoyification]

if the poorest 50% earn 25% income and the rest earn 75% income how will be the graph ?

[@vaxrvaxr]

"That is a sign of the richer becoming richer and the poorer becoming poorer." No, it isn't. It is well possible that both are becoming richer and the ricer are just becoming richer faster.

[@lobsey]

True. I should have said that the rich are becoming relatively richer and the poor are becoming relatively poorer. However, as always, using a ceteris paribus assumption would assume that the amount of income isn't increasing as you have suggested.

[@vaxrvaxr]

I didn't mean to nitpick. I just see the image "the poor become poorer" used a lot for political purposes, while the data suggest that at least globally there is a huge reduction in poverty going on.

[@furtim1]

But why assume that nothing changes in terms of total income over time? The standard condition since the advent of modern science and capitalism (~250 years of evidence) is for income and wealth to rise at a rate greater than the population rate (in the countries making use of these philosophical principles).

[@lobsey]

This model is showing the distribution of income. Income can rise over time, it will still be distributed between individuals in society, thats all this diagram is showing.

[@matt96920]

Well said.

[@kanishjain7725]

Mst...

[@dasunijayasinghe3839]

Thankyou

[@danach4692]

well done thanks

[@horeacernucan1123]

thanks!

[@amath314]

Хоть что-то нормальное нашла в Ютубе по индексу Джини

[@jefferyb2253]

A growing GINI is *NOT* a sign that the rich are getting richer and the poor are getting poorer. If ALL incomes are growing, but not growing as fast for lower-income, the poor are not getting poorer and GINI will grow.

[@lobsey]

Albatross that would depend of if you were talking about absolute or relative poverty. What you said is true about absolute poverty.

[@mikkelpetersen5982]

sell-out

[@sumitasinhmar6484]

Sir thodha hindi bhi bolo

[@Strangerforevr]

Hello Kya khabar