1. Income Distribution

2. Society Questions
What role do you think each person in society plays and why?
Person A $15,000
Person B $80,000
Person C $30,000
Person D $950,000
Describe what this society might look like

3. Lorenz Curve

4. What is it?
Illustrates the percentage of distribution of income

5. The vertical axis = the total income of the economy in 20% increments
% of income
% of population

6. The horizontal axis = the cumulative percentage of people in 20% increments
% of income
% of population

7. The blue, 45 degree line is the line of perfect equality
% of income
% of population

8. That means 20% of the population receives 20% of the income
% of income
% of population

9. That means 60% of the population receives 60% of the income
% of income
% of population

10. Do any countries income distribution actually look like this?
% of income
% of population

11. The red line represents unequal distribution
% of income
% of population

12. This red line is called the Lorenz Curve
% of income
% of population

13. Notice at the point, 60% of the population receives only 20% of the income
% of income
% of population

14. Another way of saying this is that 40% of the population receives 80% of the income
% of income
80%
% of population
40%

15. Or the top 40% receive 80% of the income
% of income
80%
% of population
40%

16. Worksheet Practice

17. Gini Index
Represented by the area above the Lorenz Curve to the line of equal distribution (A).
% of income
% of population

18. Gini Index (coefficient)
A / (A+B)
A Gini of 0 means perfect income equality, and a Gini of 1 means one person owns all the income
% of income
% of population

19. Gini Index’s around the world
China = (31st)
Mexico = .482 (25th)
Canada = .321 (117th)
Lesotho = .632 (1st)
Finland = .215(156th)
United States = .45
41st in the world