Picture of the month
A Lorenz curve shows the distribution of income in a population by plotting the percentage y of total income that is earned by the bottom x percent of households. It is usually plotted with a diagonal line (reflecting a hypothetical "equal" distribution of incomes) for comparison. An example of a cumulative distribution function, the curve was developed by economist Max O. Lorenz in 1905 to describe income inequality. A derived quantity is the Gini coefficient, first published in 1912 by Corrado Gini, which is the ratio of the area between the diagonal line and the Lorenz curve (area A in this graph) to the area under the diagonal line (the sum of A and B); higher Gini coefficients reflect more income inequality. See also Pareto principle and power law.
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