What Does “Gini” Mean?

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What Does the Name “Gini” Mean? The name “Gini” is based on an important principle in the field of Economics called the Gini Index. The Gini Index is a well-known statistical tool to measure the dispersion of any quantity in any domain, but it’s most famously associated with measuring the inequality of wealth among human populations and nations. Every population has a Gini Index value that is somewhere between two extremes: A Gini Index of zero (or 0%) means everyone has the same amount of wealth. In contrast, a Gini Index of 1 (or 100%) means only one person has all the wealth, and everybody else has none. Each country’s Gini Index is strongly correlated with many important economic and social consequences. For example, Transparency International observed:

This year’s results highlight the connection between corruption and inequality, which feed off each other to create a vicious circle between corruption, unequal distribution of power in society, and unequal distribution of wealth[1].[2]

The Mathematical Meaning of Gini. The Gini coefficient (or Gini Index or Gini ratio) is a statistical summary of the Lorenz Curve, which measures inequality in a population.[3] Mathematically, it’s often described as the "relative mean difference"; i.e., the average of the difference between every possible pair of values in a given distribution, divided by the average value. The mathematical Gini Index formula is below.

gini-index-math-formula-ginifoundation.org

Visualizing-the-Gini-Index

The Humanistic Meaning of Gini. The consequences of high Gini Indexes are profound. Whenever a country’s Gini Index is high, democracy inevitably suffers. When democracy suffers, the Gini Index tends to increase until economic oppression ignites violent social and political revolutions. This is not about ideology; it’s about basic human nature. When large human populations are oppressed by gigantic corporations and governments, they will naturally resist that oppression.

The Gini Index is Humanity's Early Warning System. The Gini Index represents an early-warning system to help economic policymakers make adjustments to release the socioeconomic pressures in their countries before violent revolutions start. This is the essence of what the Gini Foundation is working to accomplish by providing humanity with the tools that are essential to protect human rights and maximize the broad wealth-generating potential of real-world commerce.


Notes:

[1] Transparency International. (2017, September 20). Correlation between corruption and inequality.

[2] Corruption Perceptions Index 2016.

[3] Dixon et al. 1987; Damgaard and Weiner 2000.


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