Question

What is the theoretical maximum value of the Gini coefficient?

• A. 0
• B. 0.5
• C. 1
• D. 10

Answer 1

Answer:

C. 1

GINI-COEFFICIENT

• This is the widely used method to measure income and consumption inequalities.

• It measures the degree of concentration in the inequality of a variable in a distribution of its elements.

• It ranges in its limits between 0 and 1 where it assumes the value 'zero' when there is perfect equality in society.

• The Gini-coefficient gives the summary figure for Lorenz curve which first ranks the population according to different levels of consumption/income and then plots the 'cumulative proportion of consumption/income against the cumulative proportion of the population enjoying that level of consumption/income.

• The Gini coefficient takes the theoretical maximum value of 1 when in a population the income level of every individual except one is zero.