2025 Gini Index Explained: Income Inequality Rankings & Prices Worldwide

Adam Hayes, Ph.D., CFA, brings over 15 years of expertise from Wall Street as a derivatives trader, alongside deep knowledge in economics and behavioral finance. Holding a master’s degree in economics from The New School for Social Research and a Ph.D. in sociology from the University of Wisconsin-Madison, he currently teaches economic sociology and finance studies at Hebrew University, Jerusalem.

What Is the Gini Index and How Does It Measure Inequality?

The Gini index, introduced by Italian statistician Corrado Gini in 1912, quantifies income inequality within a country by assessing how income is distributed among its population.

This coefficient ranges from 0 to 1 (or 0% to 100%), where 0 represents perfect income equality and 1 indicates extreme inequality where one individual holds all the income.

For example, South Africa holds the highest Gini index globally at 63.0%, signaling severe income disparity, while Norway boasts one of the lowest at 22.7%. The United States stands at 39.8%, reflecting a relatively high inequality level for a developed nation.

Key Insights

• The Gini index serves as a vital metric for understanding income distribution across populations.
• Higher Gini values signify greater income gaps, concentrating wealth among fewer individuals.
• Global inequality, tracked via the Gini index, has escalated over centuries, sharply rising during the COVID-19 pandemic.
• Despite its usefulness, the Gini index may exaggerate inequality and overlook nuances in income distribution.

How to Understand the Gini Index

A country with equal income for all residents scores a Gini coefficient of 0, whereas one where a single person earns everything scores 1.

While typically applied to income, the Gini coefficient can also measure wealth distribution, though wealth data is harder to obtain and usually shows higher inequality.

Even wealthy nations might show moderate income inequality but significant wealth concentration in a small elite.

The Gini index is a comparative tool for analyzing income or wealth spread within nations or regions—it’s not an absolute indicator of wealth.

For instance, Turkey and the United States share similar Gini coefficients despite vast differences in average income per capita.

Visualizing Income Inequality: The Lorenz Curve

The Gini index is often illustrated with the Lorenz curve, which plots income distribution by percentile against cumulative income.

The Gini coefficient equals twice the area between the Lorenz curve and the perfect equality line, quantifying the deviation from equal income distribution.

Global and Country-Specific Gini Index Trends

Worldwide Inequality Growth

Global income inequality has risen steadily since the 19th century, with the Gini coefficient climbing from 0.50 in 1820 to approximately 0.67 in 2020, as reported by the World Inequality Lab.

The COVID-19 pandemic further exacerbated income inequality, increasing the global Gini coefficient by an estimated 0.5 points between 2019 and 2020—the largest jump since World War II.

Income Inequality by Country

The CIA World Factbook provides updated Gini coefficients for countries worldwide, revealing that some of the poorest nations have the highest inequality rates, while many wealthy European countries exhibit lower Gini values.

Research from Utrecht and Tuebingen Universities shows the complex relationship between GDP per capita and inequality, which has shifted over different historical periods.

Limitations and Considerations of the Gini Index

While insightful, the Gini index depends heavily on accurate income and GDP data. Shadow economies and informal sectors, especially in developing countries, can skew true inequality measurements.

Moreover, wealth data is often obscured by tax havens, making precise wealth inequality harder to assess.

Different income distributions can yield identical Gini coefficients, meaning the index compresses complex inequality shapes into a single figure, missing detailed distribution patterns.

The Lorenz curve offers additional context but still lacks demographic breakdowns, such as income disparities by age, race, or social groups.

Demographics affect Gini interpretations—for example, a large retired population may elevate a nation’s inequality score.

Which Country Has the Highest Gini Index in 2024?

South Africa holds the highest Gini index at 63.0%, reflecting significant income disparity influenced by racial, gender, and geographic inequalities.

What Does a Gini Index of 50 Indicate?

A Gini index of 50% marks a midpoint on the inequality scale, indicating substantial income disparity within a nation.

As of 2024, only 14 countries have Gini scores of 50 or above, highlighting severe inequality.

Is the U.S. Gini Coefficient High in 2024?

The United States’ Gini coefficient of 39.8% is high for a developed economy, driven by factors such as technological changes, globalization, declining unionization, and stagnating minimum wages.

Conclusion: Why the Gini Index Matters

Tracking income inequality through the Gini index is crucial as the wealth gap widens globally. This metric offers a valuable starting point for understanding economic disparities and sparking dialogue toward solutions.

However, it’s essential to recognize the Gini index’s limitations and complement it with other data to gain a full picture of inequality.

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