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Some metrics aren't linear so w/o knowing more about Gini coefficient, my first thought is "I have no idea if the difference is significant or not". Can someone
by bialpio 4y ago
Some metrics aren't linear so w/o knowing more about Gini coefficient, my first thought is "I have no idea if the difference is significant or not". Can someone ELI5 this so that I can build an intuition for what "1 unit of Gini" means?
- ch4s3 4y agoIt's a curve reflecting income (not wealth) share of a population against a line of perfect equality, which is a 45 degree angle. A low disparity hugs the line and a high disparity hugs the X and Y axis. Gini = A/(A + B) where A is area over the curve and B is the area under the curve. So an increase of 0.1 in the gini number reflects a larger A. It's not a very good way to measure what it is trying to measure[1]. [1] https://en.wikipedia.org/wiki/Gini_coefficient#Limitations https://en.wikipedia.org/wiki/Gini_coefficient#Limitations
- bialpio 4y agoI think the main problem is the lack of intuition of what "1 Gini means", except the "lower is better". Is difference between coefficient of 10 & 11 the same as difference between 30 and 31? The poster to which I responded said that "32 vs 41 is not far apart" - is it? Is difference between 10 and 19 the same as difference between 32 and 41 (delta is the same)? How about between 0 and 9?
- ch4s3 4y agoThat was me, and they aren't that far apart. Is 41% of the area under a lot more than 32%? Not really, see this example[1] Norway here has a coefficient of 27.5 and the US was at 41.2 but the graphs are barely different except that you can see that the US has a sharp bend on the far right hand side. The gini formula is really sensitive to that in a way that doesn't tell us much. [1] https://wol.iza.org/uploads/articles/495/images/IZAWOL.462.ga.png https://wol.iza.org/uploads/articles/495/images/IZAWOL.462.g...