Description
There is no indication of unfair distribution. For example, under the same number of Gini families, if the average income of young people is much lower than that of the middle-aged and the elderly, there will be serious problems in society-even if the parents of young people can help them with the same amount of money, young people will think that when they accept their parents' financial aid, They didn't do anything to help their children without money, so they could easily refuse to give birth.
pls use double space, 4page long . the graph explaintion can be except but not count in the words
use 3 different example to explain the limiation
Explanation & Answer
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Running head: LIMITATIONS ON GINI COEFFICIENT
Limitations on Gini Coefficient
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LIMITATIONS ON GINI COEFFICIENT
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Limitation of Gini Coefficient
Gini coefficient also known as the Gini index, or Gini ratio is a statistical measure of
economic inequality that exists in a certain population. It usually measures the distribution of
resources among populations thus providing crucial information for decision making. Gini
efficient is among the most used measure of economic inequality, and it can take any number
from 0-1. Perfect distribution of wealth in a population is demonstrated by a coefficient of 0
while inequality in a population is represented by the coefficient of 1. This measure however
only measures the distribution of wealth among the population of a certain country but do not
measure absolute income or wealth of the country. Though the Gini Coefficient is widely used
due to its effectiveness, there are still some limitations on the Gini coefficient. For instance, there
is no indication of unfair distribution. The average income of young people, for example, can be
low compared to elderly, and even if they are assisted by their parents, they may refuse with the
perception that they cannot do anything to help their children which may later discourage them
from having children. The aim of this paper is thus to provide reasons why this limitation may
exist in the Gini Coefficient.
Firstly, the above limitation exists because measuring inequality using this index gives
different value when applied to individuals rather than households. Such differences in results
may discourage a certain group of the population such as young people because they will feel
forgotten or left behind. It is obvious that most elderly or middle-aged people are more
financially stable than young people because most of them have acquired permanent jobs or have
accumulated wealth for some years, unlike young people who are struggling to get employment.
This means that elderly and middle-aged people shall score lower than the young people
meaning that they are wealthier. This would not have been possible if the measurement were
LIMITATIONS ON GINI COEFFICIENT
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taken on a household basis because the effect shall be shared across all the individuals in a
household whether employed or not.
The results from this kind of m...