Excel: Lorenz Curve and Gini Coefficient - Full Tutorial

This video tutorial shows, how to draw the Lorenz Curve in Microsoft Excel and afterwards, it's shown how to calculate the Gini Coefficient.

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0:12 Presenting the Lorenz/Gini Case
Our data set is 5 regions with population and income for each. If your data is in absolute numbers, you need to have them in %. We store the data in our Excel sheet.

0:45 Calculating the income to population share
We divide the percentage of income by the percentage of population. A high number means a high income per capita for that region and similarly a low number means a low income per capita for the region. Finally sort the data from the smallest to the biggest, giving us the poorest region first.

1:45 Calculating the cumulative population and income
Calculate the cumulative population and income.

2:29 Draw the Lorenz curve in Excel
Mark the data, click Scatter, click Scatter with Smooth Lines and Markers. This gives you the raw Lorenz curve.

2:41 Fine tuning our Lorenz curve
Fix the max of the axis. Have the units in 10% increments. Make a chart title. Give the Lorenz curve a name. Axis titles.

4:10 Make an equality curve
This is how the Lorenz curve looks like, if everyone had the same income (= the regions are all equal).

5:01 Calculating the Gini coefficient
The gini coefficient is a statistical measure, that represents the income inequality withing a group of people (e.g. a nation, a region etc.).

5:22 Calculating the area under the Lorenz curve

6:44 Calculating the area between the inequality curve and the Lorenz curve

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