ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Gini coefficient uses information from the entire income distribution and is independent of the size of a country’s economy and population. Percentile ratios are easy to calculate and focus on a specific region of the distribution. The Theil index can decompose inequality into within-and between-group inequality.

Detailed explanation-2: -Cowell says that the Gini coefficient is useful, particularly because it allows negative values for income and wealth, unlike some other measures of inequality. (If some amount of the population has negative wealth (owes money), the Lorenz curve will dip below the x-axis.) But the Gini coefficient also has limitations.

Detailed explanation-3: -The lower its value, the more equally household income is distributed. The Gini coefficient is a measure of the way in which different groups of households receive differing shares of total household income. For example, the bottom 5% of households might only have a 1% share of total household income.

Detailed explanation-4: -"The Gini coefficient provides an index to measure inequality, ” says Antonio Cabrales, a professor of economics at University College London. It is a way of comparing how distribution of income in a society compares with a similar society in which everyone earned exactly the same amount.

Detailed explanation-5: -Gini coefficient is a typical measure of income inequality. The coefficient varies between 0 and 1, with 0 representing perfect equality and 1 perfect inequality.