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The Lorenz Curve

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 21 Mar 2021

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The Lorenz curve is the graphical / visual representation of income or wealth distribution developed by American economist Max Lorenz in 1905.

The Lorenz Curve

It is drawn as a cumulative income curve. A population is divided into quintiles: The richest quintile is the 20% of households with the highest disposable income. Similarly, the poorest quintile is the 20% of households with the lowest disposable income.

The Lorenz Curve can then be contrasted with the line of perfect equality to show the scale of income and wealth inequality in a country.

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