Is it fair that some people earn far more than others? First, two ideas that are easy to mix up.
Two words that sound alike
Equality
Everyone has the same income or wealth.
Equity
Fairness: those with less may get more help.
The points to remember
- Income is a flow: what you earn each month (wages, rent, interest, profit).
- Wealth is a stock: what you own (a house, savings, shares). Wealth is far more unequal than income.
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A Lorenz curve shows how a country's income is shared, poorest first.
Corland, 2015 (made-up numbers)
| Households, poorest first | Share of income | Running total |
|---|---|---|
| Poorest 20% | 6% | 6% |
| Second 20% | 14% | 20% |
| Middle 20% | 21% | 41% |
| Fourth 20% | 27% | 68% |
| Richest 20% | 32% | 100% |
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The Gini coefficient turns the Lorenz curve into one number, from 0 (equal) to 1.
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Remember it as: Further from the line, higher Gini, more unequal.
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The points to remember
- A higher Gini means income is more unequal; a lower Gini, more equal.
- To read a table, write one sentence: "The Gini coefficient rose from 0.27 to 0.43, so income inequality increased."
Paper 1 asked this in May 2025, as part (a) for 10 marks.
Explain how the Lorenz curve diagram may be used to measure a change in the distribution of income.
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What the diagram must show
- Axes: cumulative % of population across, cumulative % of income up (not wealth).
- The diagonal line of perfect equality.
- Two labelled curves (years or countries); the more unequal one further from the line.
How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |