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Purpose

This is a technical briefing note on the use of the Gini (G) coefficient for summarising

inequality.

Background

The Pan American Health Organisation (2001) promoted a 'Gini-like' statistic as a

summary measure of inequalities in health. UK Public Health Observatories have a

role in monitoring inequalities in health (Department of Health, 2001), and must

therefore consider the statistical properties of inequality measures such as the Gini

coefficient.

History

The Gini coefficient was developed by the Italian Statistician Corrado Gini (1912) as

a summary measure of income inequality in society. It is usually associated with the

plot of wealth concentration introduced a few years earlier by Max Lorenz (1905).

Since these measures were introduced, they have been applied to topics other than

income and wealth, but mostly within Economics (Cowell, 1995, 2000; Jenkins,

1991; Sen, 1973).

G is a measure of inequality, defined as the mean of absolute differences between

all pairs of individuals for some measure. The minimum value is 0 when all

measurements are equal and the theoretical maximum is 1 for an infinitely large set

of observations where all measurements but one has a value of 0, which is the

ultimate inequality (Stuart and Ord, 1994).

When G is based on the Lorenz curve of income distribution, it can be interpreted as

the expected income gap between two individuals randomly selected from the

population (Sen, 1973). The Lorenz curve is plotted as the cumulative proportion of

the variable against the cumulative proportion of the sample (i.e. for a sample of 30

observations the cumulative proportion of the sample for the 15th observation is

simply 15/30). To get the cumulative proportion of the variable, first sort the

observations in ascending order and sum the observations, then each kth cumulative

proportion is the sum of all xi/xsum from i=1 to k.

The classical definition of G appears in the notation of the theory of relative mean

difference:

n n

i 1 j 1

xi xj

G 2

2n x

- where x is an observed value, n is the number of values observed and x bar is the

mean value.

If the x values are first placed in ascending order, such that each x has rank i, the

some of the comparisons above can be avoided and computation is quicker:

n

2

G i ( xi x)

n2 x i 1

n

i 1

(2i n 1) xi

G n

n i 1

xi

- where x is an observed value, n is the number of values observed and i is the rank

of values in ascending order.

multiplied by n/(n-1) (Dixon, 1987; Mills and Zandvakili, 1997). This corrected form

of G does not appear most literature, but there are few situations when it is not the

most appropriate form to use.

Constructing confidence intervals for Gini coefficients

The small sample variance properties of G are not known, and large sample

approximations to the variance of G are poor (Mills and Zandvakili, 1997; Glasser,

1962; Dixon et al., 1987), therefore confidence intervals are calculated via bootstrap

re-sampling methods (Efron and Tibshirani, 1997).

Two types of bootstrap confidence intervals are commonly used, these are percentile

and bias-corrected (Mills and Zandvakili, 1997; Dixon et al., 1987; Efron and

Tibshirani, 1997). The bias-corrected intervals are most appropriate for most

applications. Dixon (1987) describes a refinement of the bias-corrected method

known as 'accelerated' - this produces values very closed to conventional bias

corrected intervals.

g * / 2 , g1* /2

confidence level)/100.

g *p1 , g *p2

p1 2z0 z1 /2

p2 2z0 z1 /2

1 *

z0 # (g G) / k

- where g* is a Gini coefficient estimated from a bootstrap sample, G is the observed

Gini coefficient, is (100-confidence level)/100, is the standard normal distribution

and k is the number of re-samples in the bootstrap.

Gini-like statistics

The original Gini formula is presented in many forms, and there are Gini-like

formulae which approximate the Gini coefficient. In the context of measuring

inequalities in health, Brown (1994) presents a Gini-style index, seemingly calculated

from two variables instead of one. The two variables comprise distinct indicators of

health (y, e.g. infant deaths) and population (x, live births) for n groups sorted by a

composite measure of health and population (e.g. infant mortality rate).

n 1

Gb 1 (Yi 1 Yi )( X i 1 Xi )

i 0

Gb based on two variables (e.g. infant deaths and live births) will be very similar to G

calculated from a composite measure (e.g. infant mortality rate). In most situations it

is more natural to think of inequality of the composite measure. Another reason not

to use Gb is that its statistical characteristics are not well studied

The Pan American Health Organisation (2001) gave the following illustration:

Country GNP per capita infant mortality rate (IMR) live births infant deaths

Bolivia 2860 59 250 14750

Peru 4410 43 621 26703

Ecuador 4730 39 308 12012

Colombia 6720 24 889 21336

Venezuela 8130 22 568 12496

Bootstrap re-samples = 2000

Bias = 0.057218

Brown's Gb = 0.1904

Percentile 95% CI = 0.023645 to 0.219277

Bias-corrected 95% CI = 0.151456 to 0.241304

Percentile 95% CI = 0.029557 to 0.274096

Bias-corrected 95% CI = 0.18932 to 0.30163

Lorenz plot for I nfant M ortality Rate

P roportion of variable

1 .0 0

0 .7 5

0 .5 0

0 .2 5

0 .0 0

0 .0 0 0 .2 5 0 .5 0 0 .7 5 1 .0 0

P roportion of sample

The more observations or categories that you have the more reliable will be your

calculated G for assessing inequality.

The example above uses too few observations for reliable inference from G, but the

required definition of groups might force this type of situation. G based on few

observations is unreliable for comparing different groups at any one time, but it can

be reasonable for monitoring changes in inequalities over time.

Be aware that G can amplify biases. So, if you are comparing grouped data, make

sure that you are comparing like with like, e.g. equality of readmission rates between

hospitals biased by case-mix differences.

When you are comparing Gini coefficients, particularly over time, note that the Gini

coefficient is insensitive to multiplying all observations by a constant, but it is

sensitive to adding a constant to all observations. An example of this issue could

occur if your were comparing the equality of life-expectancy over time between

geographical areas; here the secular/baseline increase in life expectancy of the

overall population is in effect adding a constant, so there can be a change in Gini

coefficient over time even if the absolute differences in life expectancy between the

areas remain constant.

particularly where the issue of equality is multi-dimensional. If you are in doubt then

please consult with a Statistician.

Software

I have written a function in StatsDirect to produce bootstrap confidence intervals for

Gini coefficients and Lorenz plots. See http://www.statsdirect.com. I plan to extract

this Gini function into a freely-distributable Excel add-in in the future. It is not

currently practical to put this function into a web-based calculator as it is computer-

intensive, but this will become practical in the future with the growth of processing

power.

There is a Stata macro called ineqerr that will calculate bootstrap confidence

intervals for three different measures of inequality, including Gini. The results need

to be multiplied by n/(n-1) to get unbiased estimates (Dixon, 1987). See

http://www.stata.com.

Dixon (1987) supplies a SAS macro for bootstrapping Gini coefficients from

http://www.public.iastate.edu/~pdixon/sas/. See also http://www.sas.com.

Note that each run of bootstrap usually gives slightly different answers due to the

random re-sampling nature of the method. In order to get consistent bootstrap

estimates, you should select at least 2000 replications when bootstrapping any

software.

References

Brown M, Using Gini-style indices to evaluate the spatial patterns of health

practitioners; theoretical considerations and an application based on the Alberta

data. Social Science and Medicine 1994;38(9):1243-1256.

Cowell FA. Measuring Inequality (second edition, draft third edition (May 2000) at

http://darp.lse.ac.uk/Frankweb/Frank/pdf/measuringinequality2.pdf), Hemel

Hempstead: Harvester Wheatsheaf 1995.

2001. http://www.doh.gov.uk/healthinequalities/

coefficient of inequality. Ecology 1987;68:1548-1551.

Journal of the American Statistical Association 1997;92:548-560.

(Ed. Pizetti E, Salvemini, T). Rome: Libreria Eredi Virgilio Veschi 1955.

concentration. Journal of the American Statistical Association 1962;57:648-654.

EconomicReview 1987;31:182-191. Also reprinted in N. Barr (ed) Economic Theory

and the Welfare State Cheltenham: Edward Elgar 2000.

Economics (Ed. Williams A) Macmillan 1987.

Inequality (Ed. Osberg L.). New York, Armonk: Sharpe ME 1991.

Lorenz MO. Methods for measuring the concentration of wealth. Journal of the

American Statistical Association 1905;9:209-219.

inequality. Journal of Applied Econometrics 1997;12:133-150.

and Concentration Index. Epidemiological Bulletin of PAHO 2001;22(1):3-4.

http://www.paho.org/English/SHA/EB_v22n1.pdf

Stuart A, Ord JK. Kendall's Advanced Theory of Statistics (6th edition). London:

Edward Arnold 1994.

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