How a wealth distribution becomes a number
To calculate a Gini coefficient, economists first rank people or households from the least wealthy to the most wealthy. They then compare two cumulative totals: the share of the population counted so far and the share of the country’s wealth those people own.
Plotting those totals creates a Lorenz curve. If wealth were shared perfectly evenly, the curve would follow a diagonal line: the bottom 20 percent would own 20 percent of the wealth, the bottom 50 percent would own 50 percent, and so on. In real distributions, the curve bows below that line because wealth is concentrated among some groups. The Gini coefficient summarizes how far it bows: greater separation means greater inequality.
The calculation depends on what counts as wealth
Wealth is a stock of assets, not the income someone receives over a period. Depending on the measurement, assets can include homes, savings, investments, and businesses; debts are subtracted to estimate net wealth. That means two people with similar earnings can occupy very different places in a wealth ranking—for example, if one owns a valuable home and the other owes substantial debt.
The result also depends on who is counted and how. A Gini calculated for individuals may differ from one calculated for households, and estimates can change when researchers include or omit particular assets or debts. The coefficient is therefore a summary of a defined dataset, not a direct reading of inequality independent of measurement choices.
What the score can—and cannot—show
A single number makes broad comparisons easier, but it compresses a whole distribution into one measure. Two countries can have the same Gini even if wealth is concentrated in different ways: one may have a small, extremely wealthy top group, while another has a wider gap between the middle and lower ranks. The score also does not reveal how wealthy a country is overall.
The useful takeaway is that the Gini signals the degree of concentration, while the Lorenz curve—and the underlying data—show where along the wealth ladder that concentration occurs.
