NAVARRO, FAYE ANNE C.
BBE
The Gini coefficient is also known as Gini index or Gini Ratio. It measures the degree of
inequality in the distribution of family income in a country. A Lorenz curve plots the cumulative
percentages of total income received against the cumulative number of recipients, starting with
the poorest individual or household. The Gini index measures the area between the Lorenz curve
and a hypothetical line of absolute equality, expressed as a percentage of the maximum area
under the line.[8] If income distribution were more nearly equal, the index would be lower or nearer
to zero; if income distribution were more unequal, the index would be higher or nearer to 100.
Zero indicates perfect equality, while 100 indicates perfect inequality.
The Lorenz curve is a powerful and intuitive construct describing the inequality in a given
income distribution. It represents the cumulative proportion of income (or expenditure) that
accrues to each cumulative proportion of the population, beginning with the lowest income
(expenditure) group. If q represents the income share of the poorest p percentage of the
population, then the Lorenz curve depicts the relationship q = L(p). If incomes were distributed
equally, the Lorenz curve would be a straight 45 line where the poorest p% of the population
receives p% of the total income. Inequality in a given income distribution is measured by using
the deviation of the Lorenz curve from the equal distribution line. There exists a close relationship
between the Gini coefficient and the Lorenz curve. In fact the Gini measure is equal to twice the
area between the equal distribution line and the Lorenz curve. In order to make use of the Lorenz
curve, it is necessary to empirically determine the shape and location of the Lorenz curve. Usually
data on income shares in different size classes are used for this purpose. A simple and direct
approach is to simply draw a piecewise linear curve joining the points corresponding to different
size classes. A more sophisticated approach is to econometrically fit a smooth curve that satisfies
various properties expected of a Lorenz curve. A number of parametric specifications have been
used in the literature. In fact, a substantial portion of the analysis contained in Section 4 is based
on the fitting of generalized quadratic and Beta specifications of the Lorenz curve.
Ranked
Region Incomes Cumulative x y
Incomes
National Capital
1,282,823 85,514 85,514 0.000 0.000
Region
Cordillera
Administrative
113,531 113,531 199,045 5.882 1.409
Region
I - Ilocos Region
278,515 114,745 313,790 11.765 3.280
II - Cagayan
193,589 154,612 468,402 17.647 5.171
Valley
III - Central
750,054 156,872 625,274 23.529 7.719
Luzon
IVA -
1,013,942 191,720 816,994 29.412 10.304
CALABARZON
IVB -
MIMAROPA 154,612 193,589 1,010,583 35.294 13.464
V - Bicol Region 236,476 198,438 1,209,021 41.176 16.654
VI - Western
384,039 227,998 1,437,019 47.059 19.924
Visayas
VII - Central
Visayas 399,734 236,476 1,673,495 52.941 23.681
VIII - Eastern
191,720 278,515 1,952,010 58.824 27.578
Visayas
IX - Zamboanga
156,872 285,560 2,237,570 64.706 32.168
Peninsula
X - Northern
Mindanao 227,998 384,039 2,621,609 70.588 36.874
XI - Davao
285,560 399,734 3,021,343 76.471 43.203
Region
XII -
198,438 750,054 3,771,397 82.353 49.790
SOCCSKSARGEN
XIII - Caraga 114,745 1,013,942 4,785,339 88.235 62.151
Autonomous
Region in
85,514 1,282,823 6,068,162 94.118 78.860
Muslim
Mindanao
100.00 100.00
LORENZ CURVE
1.2
1
CUMULATIVE % OF WEALTH
0.8
0.6
0.4
0.2
0
0 0.2 0.4 0.6 0.8 1 1.2
CUMULATIVE % OF HOUSEHOLDS