a. In the presence of an underground economy likely to result in a Gini coefficient that overstates...

Question

a. In the presence of an underground economy likely to result in a Gini coefficient that
overstates or understates poverty?
Answer:
Gini coefficient = area under perfect equality line and actual Lorenz curve/area under
perfect equality line. Alge
aically it is calculated as;
The Gini coefficient is used to measure inequality in the society and its values lies between
zero and one. If the value of Gini coefficient is one, we would say there is perfect inequality
whereas if its value is zero, we would say there is perfect equality.
In the presence of underground economy, income of many (especially, those belonging to
high-income regions) gets unreported. In Such a case, earning statistics over-represent
certain income ranges (especially, those belonging to lower-income regions) and therefore
may...

Robert · Accepted Answer

a. In the presence of an underground economy likely to result in a Gini coefficient that 
overstates or understates poverty? 
Answer: 
Gini coefficient = area under perfect equality line and actual Lorenz curve/area under 
perfect equality line. Algebraically it is calculated as;
The Gini coefficient is used to measure inequality in the society and its values lies between 
zero and one. If the value of Gini coefficient is one, we would say there is perfect inequality 
whereas if its value is zero, we would say there is perfect equality.
In the presence of underground economy, income of many (especially, those belonging to 
high-income regions) gets unreported. In Such a case, earning statistics over-represent 
certain income ranges (especially,

a. In the presence of an underground economy likely to result in a Gini coefficient that overstates or understates poverty? b. Consider a simple economy where 90 percent of citizens report an annual...

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