The Gini coefficient, or Gini index, is a measure of inequality that indicates how equally income is distributed for a given population. It measures how much an income distribution deviates from perfect equality. Values of the Gini coefficient can range from 0 to 1. A value of 0 indicates that income is equally divided among the population, with all units receiving exactly the same amount of income. At the opposite extreme, a Gini coefficient of 1 denotes a perfectly unequal distribution, where one unit has all of the income in the economy.
For the census, Gini coefficients are calculated for three types of adjusted household income—market income, total income and after tax income. Adjusted income is computed by dividing the household income by a factor equal to the square root of the household size (known as the equivalence scale). This adjustment for different household sizes takes into account economies of scale. It reflects the fact that the needs of a household increase, but at a decreasing rate, as the number of members increases.
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