The Lorenz Curve

The Lorenz Curve is a visual tool that shows how wealth or income is distributed in a society. It plots the cumulative percentage of total income earned against the cumulative percentage of the population, starting with the poorest. If everyone earned the same, the curve would be a straight line at a 45-degree angle. The more the Lorenz Curve bows away from this line, the greater the income inequality. It helps us understand disparities in wealth and assess the fairness of income distribution within a population.