In an ideal world 20% of the country would hold 20% of the wealth, and 40% of the country would

hold 40% of the wealth, and so on. However, since ideal conditions do not exist, there is a inequality in the destruction of wealth. The Lorenz curve illustrates this inequality. Table 3 shows how much of wealth is held by 20%, 40%, 60%, 80%, and 100% in India in 2004-2005. The lowest 20% controls only 8.10% of the populations, while the highest 20% controls 45.30% of the wealth. Table 3.1 displays the income distribution in a Lorenz curve. As you graph the income distribution and compare it to the ideal distribution, the area between the two lines measures the in equality in a country. That number is called the Gini Coefficient. In India the Gini Coefficient is 36.80. The lowest score possible is 0, and the highest score is 100. The lower the Gini Coefficient the lower the gap is in income distribution compared to ideal conditions. The United States has a score of 40.8. One could assume that since India has a better score it means that people are better off in India, however, the Gini score does not provide information to indicate the proportions of a country s people are poor. The poverty rate in India is higher than in the United State, but that statistic is not reflected in the Gini score, which keeps us from accurately comparing the inequality that exists between two countries.

Income distribution - Table 3 Lowest Second Third Fourth 20% 20% 20% 20% Percentage share of income Source: World Bank 8.10% 11.30% 14.90% 20.40%

Highest 20% 45.30%

Lorenz Curve - Table 3.1

Percentage of Income
100 80 60 India 40 20 0 0% 20% 40% 60% 80% 100%

Percentage of Income Recipents

Gini Coefficient: 36.80

References:
World Bank. "Distribution of Income or Consumption." World Bank, 2005. Web. 28 Sept. 2011. <Distribution of income or consumption>.