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The trick in graphing a Lorenz curve is that you must change the shares of income for each specific quintile, which are shown in the first column of numbers in [link] , into cumulative income, shown in the second column of numbers. For example, the bottom 40% of the cumulative income distribution will be the sum of the first and second quintiles; the bottom 60% of the cumulative income distribution will be the sum of the first, second, and third quintiles, and so on. The final entry in the cumulative income column needs to be 100%, because by definition, 100% of the population receives 100% of the income.
| Income Category | Share of Income in 1980 (%) | Cumulative Share of Income in 1980 (%) | Share of Income in 2013 (%) | Cumulative Share of Income in 2013 (%) |
|---|---|---|---|---|
| First quintile | 4.2 | 4.2 | 3.2 | 3.2 |
| Second quintile | 10.2 | 14.4 | 8.4 | 11.6 |
| Third quintile | 16.8 | 31.2 | 14.4 | 26.0 |
| Fourth quintile | 24.7 | 55.9 | 23.0 | 49.0 |
| Fifth quintile | 44.1 | 100.0 | 51.0 | 100.0 |
In a Lorenz curve diagram, a more unequal distribution of income will loop farther down and away from the 45-degree line, while a more equal distribution of income will move the line closer to the 45-degree line. The greater inequality of the U.S. income distribution between 1980 and 2013 is illustrated in [link] because the Lorenz curve for 2013 is farther from the 45-degree line than the Lorenz curve for 1980. The Lorenz curve is a useful way of presenting the quintile data that provides an image of all the quintile data at once. The next Clear It Up feature shows how income inequality differs in various countries compared to the United States.
The U.S. economy has a relatively high degree of income inequality by global standards. As [link] shows, based on a variety of national surveys done for a selection of years in the last five years of the 2000s (with the exception of Germany, and adjusted to make the measures more comparable), the U.S. economy has greater inequality than Germany (along with most Western European countries). The region of the world with the highest level of income inequality is Latin America, illustrated in the numbers for Brazil and Mexico. The level of inequality in the United States is lower than in some of the low-income countries of the world, like China and Nigeria, or some middle-income countries like the Russian Federation. However, not all poor countries have highly unequal income distributions; India provides a counterexample.
| Country | Survey Year | First Quintile | Second Quintile | Third Quintile | Fourth Quintile | Fifth Quintile |
|---|---|---|---|---|---|---|
| United States | 2013 | 3.2% | 8.4% | 14.4% | 23.0% | 51.0% |
| Germany | 2000 | 8.5% | 13.7% | 17.8% | 23.1% | 36.9% |
| Brazil | 2009 | 2.9% | 7.1% | 12.4% | 19.0% | 58.6% |
| Mexico | 2010 | 4.9% | 8.8% | 13.3% | 20.2% | 52.8% |
| China | 2009 | 4.7% | 9.7% | 15.3% | 23.2% | 47.1% |
| India | 2010 | 8.5% | 12.1% | 15.7% | 20.8% | 42.8% |
| Russia | 2009 | 6.1% | 10.4% | 14.8% | 21.3% | 47.1% |
| Nigeria | 2010 | 4.4% | 8.3% | 13.0% | 20.3% | 54.0% |
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