Is it fair that some people earn far more than others? Economists separate two ideas.
Two words that sound alike
Equality
Everyone has the same income or wealth.
Equity
Fairness: help may go to those who have less.
The points to remember
- Income is a flow: what you earn each month (wages, rent, interest, profit).
- Wealth is a stock: what you own (houses, savings, shares). Wealth is far more unequal, as it builds up and is inherited.
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A Lorenz curve shows how a country's income is shared out.
Our example (made-up numbers)
| Population, poorest first | Their share of income | Cumulative share |
|---|---|---|
| Poorest 20% | 4% | 4% |
| Next 20% | 12% | 16% |
| Middle 20% | 20% | 36% |
| Next 20% | 28% | 64% |
| Richest 20% | 36% | 100% |
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The Gini coefficient turns the Lorenz curve into one number.
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The points to remember
- 0 = perfect equality; 1 = one person has all the income.
- A higher Gini: the Lorenz curve is further from the line, income is more unequal.
- One number cannot show where the inequality is, or the gap in wealth.
Remember it as: Bigger gap, bigger A, bigger Gini.
Paper 2 asked this in May 2023 and again in May 2025, for 4 marks. The data gave two Gini coefficients.
A country's Gini coefficient rose from 0.33 in 2015 to 0.50 in 2024. Using a Lorenz curve diagram, explain how the distribution of income changed.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.
Animated graph
Watch the graph build step by step in study mode.
What the diagram must show
- Axes: cumulative % of population across, cumulative % of income up (not wealth).
- The diagonal line of perfect equality.
- Two labelled Lorenz curves; the more unequal one further from the line.
How the 4 marks are given
| Marks | What your answer needs |
|---|---|
| 3–4 | A correct, labelled diagram and the explanation: higher Gini = more unequal (1), the curve further from the line of equality (1) |
| 1–2 | A correct diagram or the explanation |
| Wrong axis labels | At most 3 |