 ## Syllabus: Indicators of income equity

Syllabus: Analyse data on relative income shares of given percentages of the population, including deciles and quintiles.

If you would prefer to view this interaction in a new web window, then please follow the link below:

In statistics Deciles are when the distribution is divided into groups of 10 (if the distribution is out of 100) or are tenths. In the digram above the cumulative percentage of earners is on the Y axis and each `notch´ shows a decile. Check your understanding by using the graph to find out what the 4th decile of the population receive as their share of income.

Ans: Approximately 10% to 18% therefore they receive approximately 8%. You may find it better to draw this accurately on graph paper.
What is the share of income of the 7th Decile?

Quintiles are when the data is in fifths - you can see this in the interactive diagram by referring to the numbers (0 to 20 is the first quintile). So use the diagram again, this time to discover what share of income the third quintile has.

This should be quite straightforward for you all - let your teacher know if it is not.

Syllabus: Draw a Lorenz curve and explain its significance.

 First a note on the command term Draw The syllabus explanation of `draw´ is: Represent by means of a labelled, accurate diagram or graph, using a pencil. A ruler (straight edge) should be used for straight lines. Diagrams should be drawn to scale. Graphs should have (if appropriate) and joined in a straight line or smooth curve.

The command words Analyse and Draw suggests they are likely to test knowledge and understanding of the Lorenz Curve and Gini Coefficient on Paper 3. In a full paper 3 question I can see a possiblity of you having to plot and draw a Lorenz curve from given data, interpret the diagram, calculate the Gini Coefficient and explain its significance, especially comparing it with other given gini coefficients.

Syllabus: Explain how the Gini coefficient is derived and interpreted.

However, it is not beyond the realms of possibilities that it could be an essay in Paper 1 and for that you would need to be able to sketch out an illustration of a Lorenz Curve so you are able to use it to explain what is meant by the Gini Coefficient.

Possible Essay question:

a) Using an appropriate diagram explain what is meant by a Gini Coefficient. (10 marks)

Essay questions part (b) are based around higher order command words like evaluate and discuss and your syllabus says:

Syllabus: Evaluate government policies to promote equity (taxation, government expenditure and transfer payments) in terms of their potential positive or negative effects on efficiency in the allocation of resources.

Each of these policies are covered in detail in the pages ahead.

So an obvious part (b) addition to the part (a) above would be

b) Evaluate government policies to make the distribution of income more equitable (15 marks)

Try writing this out and giving to your teacher for marking. 