Tuesday, June 7, 2011

Lorenz curve

the Lorenz curve is a graphical representation of the cumulative distribution function of the empirical probability distribution of wealth; it is a graph showing the proportion of the distribution assumed by the bottom y% of the values.
It is often used to represent income distribution, where it shows for the bottom x% of households, what percentage y% of the total income they have. The percentage of households is plotted on the x-axis, the percentage of income on the y-axis.
It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.

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