The Gini coefficient is a number between 0 and 1 that measures how unequally income or wealth is distributed in an economy. A Gini of 0 means perfect equality (everyone earns the same), while 1 means perfect inequality (one person earns everything). It is the numerical partner of the Lorenz curve.
The Gini coefficient is a single number that summarizes income or wealth inequality in an economy. It runs from 0 to 1. A coefficient of 0 means perfect equality, where every household earns exactly the same share of income. A coefficient of 1 means perfect inequality, where one household earns everything and everyone else earns nothing. Real economies fall somewhere in between, so a rising Gini means inequality is growing and a falling Gini means income is being shared more evenly.
Here's the intuition: the Gini coefficient is basically the Lorenz curve turned into a number. The Lorenz curve shows graphically how far an income distribution bows away from the 45-degree line of perfect equality, and the Gini measures the size of that bow. The bigger the gap between the Lorenz curve and the line of equality, the higher the Gini. Per the CED (EK POL-5.A.2), you use both tools to represent inequality and compare it across countries, policies, or time periods. One thing to relax about: actually calculating a Gini coefficient or plotting a Lorenz curve from data is explicitly excluded from the AP Exam. You just need to interpret them.
The Gini coefficient lives in Topic 6.5 (Inequality) in Unit 6: Market Failure and the Role of Government, supporting learning objective AP Micro 6.5.A (define measures of economic inequality in income and wealth). It's the standard measurement tool you'll be asked to interpret when the exam tests inequality. It also connects to AP Micro 6.5.B, because once you can measure inequality, the next question is what causes it. Sources like differences in human capital, inheritance, discrimination, tax structures, and bargaining power all show up as a higher or lower Gini. Topic 6.5 closes out the entire course, so the Gini coefficient is often where AP Micro lands its final point: markets distribute income through marginal productivity, and that distribution can be very unequal.
Keep studying AP Microeconomics Unit 6
Lorenz Curve (Unit 6)
These two are a matched set. The Lorenz curve is the picture and the Gini coefficient is the number that summarizes it. When the Lorenz curve bows further from the line of perfect equality, the Gini coefficient rises. Exam questions love testing whether you know these move together.
Income Distribution (Unit 6)
The Gini coefficient is how economists score an income distribution. Comparing the Gini of two countries, or one country over two decades, tells you instantly which distribution is more equal without staring at raw income data.
Factor Markets and Marginal Product (Unit 5)
Why does inequality exist in the first place? EK POL-5.B.1 says each factor of production earns the value of its marginal product. Workers with more human capital have higher marginal products, so they earn more. The Gini coefficient measures the inequality that this marginal productivity logic produces.
Progressive Taxes and Government Policy (Unit 6)
A highly progressive tax system takes a larger percentage from high earners, which compresses the income distribution and lowers the Gini coefficient. Regressive taxes do the opposite. This is the link between measuring inequality (6.5.A) and explaining its sources (6.5.B).
The Gini coefficient shows up in multiple-choice questions, and the good news is the bar is interpretation, not calculation. The CED explicitly excludes computing Gini coefficients or drawing Lorenz curves. Expect MCQ stems like these: identifying that the Lorenz curve is the graphical representation of income inequality, recognizing that a rising Gini paired with a Lorenz curve bowing further from the line of equality means inequality is increasing, or predicting how a highly progressive tax system would shift income distribution and lower the Gini. You should be able to (1) state what 0 and 1 mean, (2) connect Gini movements to Lorenz curve movements, and (3) link policy changes like progressive taxation to a change in the coefficient. No released FRQ has centered on the Gini coefficient by name, but Topic 6.5 content is fair game for short interpretive questions, so know the direction of change cold.
They measure the same thing in different forms. The Lorenz curve is a graph plotting the cumulative share of income against the cumulative share of the population, and the Gini coefficient is a single number derived from how far that curve bows from the 45-degree line of equality. If a question shows you a graph, it's asking about the Lorenz curve. If it gives you a number between 0 and 1, it's the Gini. They always move together: a curve bowing further out means a higher Gini.
The Gini coefficient ranges from 0 (perfect equality, everyone earns the same) to 1 (perfect inequality, one person earns everything).
The Gini coefficient and the Lorenz curve always move together: when the Lorenz curve bows further from the line of equality, the Gini rises.
You will never have to calculate a Gini coefficient or draw a Lorenz curve on the AP Exam; the CED only requires you to interpret and compare them.
The Gini is used to compare inequality across countries, across time periods, and before versus after a policy change like a progressive tax.
Sources of the inequality the Gini measures include differences in human capital, inheritance, discrimination, tax structures, access to financial markets, and bargaining power (EK POL-5.B.2).
A more progressive tax system tends to lower the Gini coefficient; a more regressive system tends to raise it.
It's a measure of income or wealth inequality ranging from 0 to 1, covered in Topic 6.5 (Inequality) under learning objective AP Micro 6.5.A. A Gini of 0 means everyone earns the same income, and a Gini of 1 means one person earns all of it.
No. The CED explicitly excludes calculating Gini coefficients and drawing Lorenz curves from the exam. You only need to interpret what the number means and how it changes.
The Lorenz curve is a graph showing cumulative income shares, and the Gini coefficient is a single number summarizing how far that curve bows from the line of perfect equality. Same inequality, two formats: picture versus number.
More. As the Gini moves toward 1, income is concentrated among fewer people, and the Lorenz curve bows further away from the 45-degree line of equality. As it moves toward 0, income is shared more evenly.
A progressive tax takes a larger percentage of income from high earners, which makes the after-tax income distribution more equal and lowers the Gini coefficient. This is exactly the kind of policy-to-measurement link Topic 6.5 questions test.