Lorenz Curve & Gini Coefficient
Visualise income inequality across countries. Switch between market income and post-tax disposable income to see the effect of redistribution — the key government intervention mechanism at A-Level.
What is the Lorenz Curve?
The Lorenz curve, developed by Max Lorenz in 1905, plots cumulative income share against cumulative population share, starting with the poorest. The diagonal from (0,0) to (100,100) is the line of perfect equality — where every decile earns 10%.
The Gini Coefficient
The Gini coefficient is the ratio of the area between the line of equality and the Lorenz curve (area A) to the total area under the line of equality (A+B):
It ranges from 0 (perfect equality) to 1 (maximum inequality, one person owns everything).
Interpreting Gini values
Redistribution — the key A-Level mechanism
Market income (before taxes and benefits) is far more unequal than disposable income. In the UK, the market Gini is ~0.52 but falls to ~0.35 after redistribution — a reduction of 17 Gini points. This gap is achieved through:
- Progressive income tax — higher earners pay a greater % of income
- Means-tested benefits — Universal Credit, Housing Benefit etc.
- Universal benefits — Child Benefit, State Pension
- Benefits in kind — NHS, state education (not captured in income Gini)
Use the "Income measure" toggle in the Countries tab to see this effect for each country.
Limitations — for exam evaluation
- Two very different distributions can share the same Gini — it doesn't show where inequality occurs
- Measures income inequality, not wealth inequality (wealth Ginis are typically 0.6–0.8)
- Doesn't capture absolute living standards — a rising tide may lift all boats even if the Gini rises
- Difficult to compare across countries with different cost-of-living levels
- The Lorenz curve can intersect — two countries with the same Gini may have very different distributions
Discussion questions
- Should governments target reducing the Gini or raising absolute incomes of the poorest?
- Why might some inequality be beneficial for growth incentives?
- How do progressive taxes and benefits affect the shape of the Lorenz curve?
- Why is the UK's market Gini (~0.52) so much higher than its disposable income Gini (~0.35)?
- What are the social consequences of high inequality beyond income?
| Decile | Primary share | Distribution |
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