Gini Coefficient Formula Excel Template

Prepared by Dheeraj Vaidya, CFA, FRM

dheeraj@wallstreetmojo.com

visit - www.wallstreetmojo.com
The Gini coefficient of 2 countries based on the income of citizens is as under.a)Interpret the trend of income
inequality in the two countries.b)Which country has higher income inequality in 2015?

Particulars Country A Country B

2010 0.4 0.38
2011 0.43 0.37
2012 0.48 0.35
2013 0.5 0.34
2014 0.52 0.3
2015 0.57 0.29
Income inequality has Income inequality
a) Conclusion been Rising has been Declining
Country A has higher
b) Conclusion income inequality in -
2015
trend of income
In a particular country, the lowest 10% of the earners make 2% of all wages. The next 40% of earners make 13% of
wages. The next 40% of earners make 45% of all wages. The highest 10% of all earners make 40% of all wages.
Calculate the Gini coefficient of the country.

Fraction of Fraction of % of Population

Income Population that is Richer Score Score Formula

0.02 0.1 0.90 0.038 =A2*(B2+2*C2)

0.13 0.4 0.50 0.182 =A3*(B3+2*C3)
0.45 0.4 0.10 0.27 =A4*(B4+2*C4)
0.4 0.1 0 0.04 =A5*(B5+2*C5)

Sum of Scores 0.53

Gini Coefficient 0.47
earners make 13% of
40% of all wages.
The Administration of a village is concerned about income inequality in the village. It wants to introduce some developmen
to reduce income inequality. For this purpose, it requires data relating to income inequality. The Administration orders a res
study about income levels in his village. Here are some findings from the research study: 6 people earn Rs 10 each, 3 people
each and 1 person earns Rs 80. Calculate the Gini coefficient relating to the income inequality in the village.

Number of Income Total Income (Number Fraction of Fraction of

Persons of Persons * Income) Income Population

6 10 60 0.3 0.6
3 20 60 0.3 0.3
1 80 80 0.4 0.1
10 200

Fraction of Fraction of % of Population that is

Score Score Formula
Income Population richer
0.3 0.6 0.4 0.42 =A2*(B2+2*C2)
0.3 0.3 0.1 0.15 =A3*(B3+2*C3)
0.4 0.1 0 0.04 =A4*(B4+2*C4)

Sum of Scores 0.61

Gini Coefficient 0.39
 o introduce some developmental schemes
The Administration orders a research
eople earn Rs 10 each, 3 people earn Rs 20
y in the village.
In a country, there are huge skyscrapers along with humungous slums. The Chief Economist of the country believes that the
huge income inequality. He finds the following data: The lowest 20% of the earners make 2% of all income. The next 40% of
earners make 10% of all income. The next 30% of earners make 20% of all income. The richest 10% of earners make 68% of a
income. Calculate the Gini coefficient to give the Chief Economist a statistical measure of income inequality.

Fraction of Fraction of % of Population

Score
Income Population that is richer
0.02 0.2 0.8 0.036
0.1 0.4 0.4 0.12
0.2 0.3 0.1 0.1
0.68 0.1 0 0.068

Sum of Scores 0.324

Gini Coefficient 0.676
country believes that there is
income. The next 40% of
of earners make 68% of all
nequality.