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Posted by / 15-Sep-2017 12:50

That leaves the remaining 11.31% of the nation’s income in the hands of the richest 1%.

We then plot each of those points on a graph with the horizontal axis showing the cumulative percentage of individuals, ranked from poorest to richest, and the vertical axis showing the cumulative share of total income received by that set of people.

In that case, the poorest X% of the population would receive X% of total income, so the blue “perfect equality” Lorenz curve forms a straight 45 degree line from southwest to northeast on the chart.

Intuitively, it should be clear that the greater the degree of inequality, the larger will be the “lens” formed between the two lines.

Many tables in this publication include mean household income and median household income data.

The main income measure used in this publication is equivalised disposable household income, and the means and medians are calculated with respect to the relevant number of persons.

In each case, the researcher is posing the question ‘What proportion of total income is received by 5 per cent, 10 per cent, 15 per cent (and so on) of all income recipients?The Lorenz curve is a graphical representation of the distribution of some measure – income, consumption, education, etc.-- among a population of people, households, or other units.By comparison, the Gini coefficient for Denmark in 2012 was 29.08, which shows up on the second chart as a much narrower inequality “lens” between the orange and blue lines.Most countries fall somewhere between these extremes.

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That gives us the orange line in the first chart below.