Wednesday, March 28, 2012

Lorenz Curve


     This is a Lorenz curve: a graph on which the cumulative percentage of some variable is plotted against the cumulative percentage of the corresponding population and is ranked in increasing size of share. The extent to which the curve sags below the straight diagonal line indicates the degree of inequality of distribution. This Lorenz curve shows the relationship between the percentage of households verses the percentage of income. The green line indicates perfect equality, the red line represents the Lorenz curve, and the blue line shows perfect inequality. One can see that 60% of income is concentrated in 80% of households; this means the income is not distributed equally.







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