The Gini coefficient (also, Gini index) measures the extent to which the distribution of income or consumption among individuals or households within an economy deviates from a perfectly equal distribution.1 The coefficient ranges from 0 (perfect equality) to 1 (complete inequality). Put another way, a country in which every person has the same income would have a Gini coefficient of 0. Conversely, a country in which one resident earned all the income, while everyone else earned nothing, would have a Gini coefficient of 1.2
The coefficient is named for the Italian statistician and demographer Corrado Gini who in 1912 published the mathematical formulation for the coefficient. The calculation of the coefficient requires comprehensive income information that frequently is unavailable or unreliable for some countries.
The most recent international data for the Gini coefficient indicate two things. First, income inequality is present in every country in the world. Second, there is a wide range of income inequality. South Africa has the highest coefficient (0.63) while Slovakia has the lowest (0.23). Over the past several decades income inequality has worsened in China and India, the most populous nations, and in affluent nations such as Austria, Denmark, Germany, Finland, and the United States.
Consistent with previous research, we observe an asymptotic relationship between energy use per capita and income inequality.3 Extremely low levels of energy use per capita are associated with higher Gini coefficients (greater income inequality). Increases in energy use per capita are associated with shrinking Gini coefficients meaning that income inequality improves. But above about 30 GJ per capita, further increases in energy use per capita have smaller and smaller impacts on the Gini coefficient.
There are important details embedded in this overall relation between energy use and income inequality. As a whole Europe stands out as the highest energy use per person and the lowest income inequality. The data for European countries consistently falls within a range of 50 to 250 GJ per person, with income inequality levels not surpassing 0.4, as seen in Bulgaria. There aren’t any instances of extremely low consumption or significantly high inequality. Countries such as Slovenia, Slovakia, and the Czech Republic have the lowest levels of income inequality globally.
However, when we examine the data through the lens of development stages, comparing developing to developed countries, increased energy use does not always lead to lower income inequality. For instance, Scandinavian countries have high energy consumption and low-income inequality. On the other hand, the United States demonstrates both high energy consumption and pronounced income inequality, marked by a Gini coefficient of 0.42. In addition, income inequality in the United States worsened by 18 percent from 1967 to 2021.4 Interestingly, many African countries display less income inequality than the United States despite rates of energy use per capita that are two orders of magnitude lower.
1 World Bank, “DataBank Metadata Glossary,” accessed October 17, 2023, Link
2 Hayes, Adam, “Gini Index Explained and Gini Co-efficients Around the World,” Investopedia, May 27, 2023, https://www.investopedia.com/terms/g/gini-index.asp
3 Jackson, Robert B., Anders Ahlström, Gustaf Hugelius, Chenghao Wang, Amilcare Porporato, Anu Ramaswami, Joyashree Roy, and Jun Yin. “Human Well-Being and per Capita Energy Use.” Ecosphere 13, no. 4 (2022): e3978. https://doi.org/10.1002/ecs2.3978.
4 Our World in Data, “Income inequality: Gini coefficient, 1974 to 2020,” accessed October 17, 2023, https://ourworldindata.org/grapher/economic-inequality-gini-index
