Name: Course: Date: Group

Dellendo Farquharson MANAGEMENT FOR ENGINEERS Code ENG4016 June 1, 2012

Assignment 1

1. What have you learnt about the Gini index? Gini index measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. 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. Thus I have learnt that a Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality.

2. What is the Geni index score for Jamaica and other countries in the Caribbean The table below shows the Gini Index score for Jamaica and the Caribbean for the years 2002 to 2010. GINI INDEX FOR JAMAICA AND OTHER CARIBBEAN COUNTRIES Country name Colombia Dominican Republic Honduras Jamaica Mexico Nicaragua Venezuela, RB 49 48.1 47.5 50.1 58.9 48.3 49.7 52.1 58.7 52 58.5 45.5 46.1 40.5 49.5 44.8 48.1 51.1 59.7 51.9 57.6 48.4 2002 2003 2004 2005 2006 2007 2010 56

3. Name the countries with the highest and lowest levels of inequality in income distribution and state their Geni index scores. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality. To be validly computed, no negative goods can be distributed. Thus, if the Gini coefficient is being used to describe household income inequality, then no household can have a negative income. When used as a measure of income inequality, the most unequal society will be one in which a single person receives 100% of the total income and the remaining people receive none (G = 1); and the most equal society will be one in which every person receives the same income (G = 0).

The following table shows the countries with the highest and lowest level of inequality taken in the base year. For example: Honduras recorded the Highest level of inequality with a Gini index score of 58.9 (yellow coded) while Jamaica recorded the lowest level of inequality with a Gini index score of 48.3 (red coded) in the year 2002. GINI INDEX FOR JAMAICA AND OTHER CARIBBEAN COUNTRIES Country name Colombia Dominican Republic Honduras Jamaica Mexico Nicaragua Venezuela, RB 49 48.1 47.5 50.1 58.9 48.3 49.7 52.1 58.7 52 58.5 45.5 46.1 40.5 49.5 44.8 48.1 51.1 59.7 51.9 57.6 48.4 2002 2003 2004 2005 2006 2007 2010 56

KEY Highest Level of inequality Lowest Level of Inequality

REFERENCE https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html retrieved June 1, 2012 http://data.worldbank.org/indicator/SI.POV.GINI/countries?display=default, retrieved June 1, 2012