Students will be able to:
- Create and interpret a Lorenz Curve illustrating distribution of income.
- Calculate and interpret a Gini coefficient representing distribution of income.
In this economics lesson, students derive a Lorenz Curve and Gini coefficient in order to represent income distribution.
Open the PowerPoint slides. Show slide 1 on the project screen. Use the speaking notes in the the PowerPoint slide to guide you through talking points. Review slides 1 and 2 in the warm-up.
Hand out a copy of the Lorenz Curves worksheet to each student. Show Slides 3-7. Use the speaking notes in slides 3-7 as a reference for talking points. The slides walk students through graphing a Lorenz Curve and calculating the Gini Coefficient. Show slide 8. Show students the YouTube Video Measures of Income Inequality. The video reinforces the Lorenz Curve, showing the examples of Norway and South Africa, and explains the Gini Coefficient calculation.
Hand out the Lorenz Curves and Gini Coefficients worksheet with questions on Lorenz Curves and Gini Coefficients. This includes the CIA World Factbook. Break students into groups of 2-3 students. Give students 10-15 minutes to discuss and answer the questions. Review the answers of the activity as a class. Select several groups of students to present their answers. Students may graph the Lorenz Curves on whiteboards and also show the country ranking on the board. Open the Lorenz Curves and Gini Coefficients Answer Key for the teacher guide.
Have students complete the Our World in Data: Gini Coefficient worksheet. Students are instructed to visit the website Our World in Data, which uses the Gini Coefficient (Gini Index) to make many comparisons between countries and over time. Students can click on each graph in the article to enlarge it. On this site, the Gini Coefficient is expressed as a decimal (0.40 instead of 40, for example), but it is the same measure. Students are required to answer questions on the worksheet. Open the Our World in Data: Gini Coefficient Answer Key for the teacher guide.