The Lorenz Curve and the Gini
Coefficient are Misleading
visitors
Paradoxically, economies with the most income inequality, such as the Saudi Arabian feudal model, have the most apparent income equality, as indicated by the flatness of the Lorenz Curve and measured by the Gini coefficient. Consider a population described in the table below.
The Lorenz curves with the lowest Gini Coefficient describe populations with the biggest middle class. The feudal model yields a Gini coefficient of .81 and the industrial model a coefficient of .74.
Here is the data:
| Heirarchy Ratio | 10 | 50 | |||||||
| Cohort | Class | Annual Income | Population | Cohort Income | Cumulative Population | Cumulative Income | Area under curve | Area if Triangle | Gini Coefficient |
| 0 | 0 | ||||||||
| 1 | Serfs | $ 100 | 10,000,000 | $ 1,000,000,000 | $ 10,000,000 | $ 1,000,000,000 | 5,000,000,000,000,000 | ||
| 2 | Vassals | $ 1,000 | 200,000 | $ 200,000,000 | $ 10,200,000 | $ 1,200,000,000 | $ 220,000,000,000,000 | ||
| 3 | Shieks | $ 10,000 | 4,000 | $ 40,000,000 | $ 10,204,000 | $ 1,240,000,000 | $ 4,880,000,000,000 | ||
| 4 | Elders | $ 100,000 | 80 | $ 8,000,000 | $ 10,204,080 | $ 1,248,000,000 | $ 99,520,000,000 | ||
| 5 | Princes | $ 1,000,000 | 2 | $ 1,600,000 | $ 10,204,082 | $ 1,249,600,000 | $ 1,998,080,000 | ||
| King | $ 10,000,000 | 1 | $ 320,000 | $ 10,204,082 | $ 1,249,920,000 | $ 39,992,320 | |||
| $ 5,224,981,558,072,320 | 6,377,142,856,734,720 | 0.81 |
And here is the Lorenz curve:
Now consider a more American Model:
Here is the data:
| Heirarchy Ratio | 3 | 8 | |||||||
| Cohort | Class | Annual Income | Population | Cohort Income | Cumulative Population | Cumulative Income | Area under curve | Area of Triangle | Gini Coefficient |
| 0 | 0 | ||||||||
| 1 | Unskilled | $ 100 | 5,000,000 | $ 500,000,000 | $ 5,000,000 | $ 500,000,000 | 1,250,000,000,000,000 | ||
| 2 | Skilled | $ 300 | 625,000 | $ 187,500,000 | $ 5,625,000 | $ 687,500,000 | $ 371,093,750,000,000 | ||
| 3 | Managers | $ 900 | 78,125 | $ 70,312,500 | $ 5,703,125 | $ 757,812,500 | $ 56,457,519,531,250 | ||
| 4 | Group Managers | $ 2,700 | 9,766 | $ 26,367,188 | $ 5,712,891 | $ 784,179,688 | $ 7,529,258,728,027 | ||
| 5 | Vice Presidents | $ 8,100 | 1,221 | $ 9,887,695 | $ 5,714,111 | $ 794,067,383 | $ 963,285,565,376 | ||
| Senior Vice Presidents | $ 24,300 | 153 | $ 3,707,886 | $ 5,714,264 | $ 797,775,269 | $ 121,447,956,190 | |||
| Executives | $ 72,900 | 19 | $ 1,390,457 | $ 5,714,283 | $ 799,165,726 | $ 15,229,616,110 | |||
| CEO | $ 218,700 | 2 | $ 521,421 | $ 5,714,285 | $ 799,687,147 | $ 1,905,981,151 | |||
| $ 1,686,165,261,780,840 | 2,279,349,215,095,860 | 0.74 |
Here is the Lorenz Curve:
Clearly the Saudi Arabian type feudal distribution is flatter than the American Middle class distribution.
Clifford W. Lazar email a Comment
Los Angeles, CA USA
10/11/04
Income Distribution Economics Lorenz Curve Gini Coefficient
Income Distribution Economics Lorenz Curve Gini Coefficient
| Blog Topic | Blog Title | Date |
| Politics | Why Do So Many Jews Vote Democratic | 10/26/06 |
| Politics | Some Things You Have To Believe To Be A Liberal | 9/6/06 |
| Politics | Some Things You Have To Believe To Be A Republican Today | 9/6/06 |
| Jihad | Fighting Radical Jihaddists | 9/6/06 |
| Hezbollah | Getting Actionable Intelligence on Hezbollah | 8/12/06 |
| Intelligent Design | Intelligent Design | 12/23/05 |
| Katrina | Paying for Katrina | 9/23/05 |
| Katrina | A Dialogue on the Katrina aftermath | 9/8/05 |
| Katrina |
Katrina,
What to Do Lessons from Katrina |
9/2/05 |
| FBI Secret Searches | Limit FBI Administrative Authority | 1/17/05 |
| Iraq Blunders | Predictions of Blunders in Iraq | 1/17/05 |
| Media Bias | Charles Krauthammer Asserts and Distorts About Media Bias | 1/16/05 |
| Tsunami | Diego Garcia may have been damaged by the Indian Ocean Tsunami | 1/2/05 |
| Single Life | Getting from Living Together to Marriage | 10/15/04 |
| Income Distribution Economics | 10/11/04 | |
| Indifada | Jonathan Cook's Advocacy of Palestinian Indifada Violence | 9/2/04 |
| Fahrenheit 911 | Fahrenheit 911: Critique and Response | 7/30/04 |
| Jobs Economics | Jobs Creation Policies | 7/24/04 |
| LNG Long Beach | Mitsubishi Should Not Lie About LNG in Long Beach | 4/29/04 |
| Wounded Veterans and Dependents | Petition for Fair Treatment of Wounded Veterans and Dependents of Those Killed in Action in Iraq and Afghanistan | 12/06/03 |
| Bigotry | Prayer vs. Self-Defense | 11/17/03 |
| Iraq | Building the Iraqi Economy | 8/29/03 |
| Computer Viruses | Fighting Viruses Effectively | 9/2/03 |
| Noah Winer | Response to MoveOn.Org's Explanation | 7/10/03 |
| Indifada | Response to MoveOn.Org's Pro-Palestinian Bulletin | 7/10/03 |
| al Queda | Is Tom Clancy a Source of Ideas for al Queda? | 5/12/03 |
| Tax Cuts | Employment Scoring of Proposed Tax Cuts | 5/9/03 |
| Laci Peterson | Laci Peterson -- Possible Scenarios | 4/15/03 |
| Iraq | Implications of Rapid Conquest -- More Nukes | 4/14/03 |
| Iraq | Answering A.N.S.W.E.R. on Iraq | 2/21/03 |
| Iraq | 2/17/03 | |
| Iraq | Peaceful Occupation of Iraq | 2/17/03 |
| Iraq | 2/14/03 | |
| Black Holes | Black Hole Genesis | 3/8/03, 7/2/04 |
| Space Shuttle |
Find the Columbia Space Shuttle's External Tank Terrorist or hunter? |
2/4/03 |
| Iraq | 1/30/03 | |
| Iraq | Partition Iraq and Solve The Sadam Hussein Problem | 07/28/92 |
| Islam Uber Alles | Islam Uber Alles Should we slow the march of Islam? | |
| Economics |
Balancing US Exports Full Employment Through Capital Gains |
|
| Politics | The Differences between Democrats and Republicans, a dialog | |
| Divorce | Divorce Super Fund, Let Spouses Afford to Re-marry | |
| Drugs, Crime | Legalize Addicts Not Drugs | |
| Air Pollution | Solving Smog in Cities with Inversion Layers (Coming) | |
| Science | The Cause of TWA 800 | |
| Medicine | Protect seniors with large type on prescription bottles and medical equipment | |
| Discrimination | Ending Men-Only Clubs If it's Social, it doesn't need a tax deduction | |
| Air Safety | Stinger Missile Defense | |
| Links |
Russ
Abbott http://russabbott.blogspot.com. computer science, politics |
7/24/04 |