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f. Lorenz curve
- A graphical representation of wealth distribution developed by American
economist Max Lorenz in 1905. On the graph, a straight diagonal line
represents perfect equality of wealth distribution; the Lorenz curve lies
beneath it, showing the reality of wealth distribution. The difference between
the straight line and the curved line is the amount of inequality of wealth
distribution, a figure described by the Gini coefficient.
- a curve formed by plotting the cumulative distribution of the amount of a
variable against the cumulative frequency distribution of the individuals having
the amount (as for indicating the degree of concentration of salary income
among a number of individuals)
-
where
is the cumulative distribution function of ordered individuals
and is the average size.If all individuals are the same size, the Lorenz
curve is a straight diagonal line, called the line of equality. If there is any
inequality in size, then the Lorenz curve falls below the line of equality.
The total amount of inequality can be summarized by the Gini
coefficient (also called the Gini ratio), which is the ratio between the area
enclosed by the line of equality and the Lorenz curve, and the total
triangular area under the line of equality. The degree of asymmetry around
the axis of symmetry is measured by the so-called Lorenz asymmetry
coefficient.