ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Lorenz curve is a graphical representation of the distribution of wealth in a society. The further away from the bisector the curve is, the greater the inequality. The Gini coefficient, derived from the Lorenz curve, is the most widely used measure of income inequality in a society.

Detailed explanation-2: -The most commonly used inequality measures are the Gini coefficient (based on the Lorenz curve) and the percentile or share ratios.

Detailed explanation-3: -How Does the Lorenz Curve Measure Inequality? The Lorenz curve is a graphical representation of the distribution of income or wealth in a society. Basically, the farther the curve moves from the baseline, represented by the straight diagonal line, the higher the level of inequality.

Detailed explanation-4: -Two of the most commonly used income distribution measures are the shares of aggregate household income received by each quintile and the Gini index.

Detailed explanation-5: -By far the most popular measure of income inequality, the Gini coefficient15, 16, 17, 18 is derived from the Lorenz curve framework illustrated in figure 1. Figure 1 The Lorenz curve framework (hypothetical data). The Lorenz curve shows the percentage of total income earned by cumulative percentage of the population.