The following table shows the income distribution by quintile for the UK in 1991, for various definitions of income:

(a) Use equation (10.27) to calculate the Gini coefficient for each of the four categories of income.

(b) For the ‘original income’ category, draw a smooth Lorenz curve on a piece of gridded paper and calculate the Gini coefficient using the method of counting squares. How does your answer compare to that for part (a)?

(10.27)

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Quintile Income measure Original Gross Disposable Post-tax 1 (bottom) 2.0% 6.7% 7.2% 6.6% 2 7.0% 10.0% 11.0% 11.0% 16.0% 16.0% 16.0% 16.0% 4 26.0% 23.0% 23.0% 23.0% 50.0% 44.0% 42.0% 44.0%