How do you read a Lorenz curve?

The Y-axis represents the income, and the X-axis represents the population. The percentage of wealth or income owned by a percentage of the population can be identified from any point in the Lorenz Curve. The Lorenz curve is not only used for studying income inequality but also other systems. The Gini index is measured from the Lorenz curve. You can read about the Lorenz Curve: Definition, Explanation and Relevant Questions in the given link.

If the Lorenz curve is shifting far away from the line of equality then it indicates that the income inequality is higher and the gini coefficient is higher. If the lorenz curve is closer to the line of equality then it indicates that the gini coefficient is lower and income inequality is lower.

Further readings:

  1. Gini Coefficient – Definition, Calculation and India’s Rankings
  2. Income Inequality In India: Background, Factors and Conclusion

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