Estimating Gini Coefficient Based on Hurun Report and Poverty Line

Zhaoben Fang, Junpeng Zhu, Rongjie Deng

Department of Statistics and Finance, University of Science and Technology of China, Hefei, China.

DOI: 10.4236/ojs.2013.33018                

Abstract

Based on the review of various methods of estimating Gini coefficient, the paper applies a quintile rule to estimate Gini coefficient of rural areas, urban areas and the whole country using the grouped income data of urban and rural residents. Besides, the paper uses the curve-fitting method to roughly estimate Gini coefficient from eye-catching Hurun Rich List and the latest poverty line. The result shows that the estimation of Gini coefficient using quintile rule is small for both urban and rural area, while the value of the whole country is obviously larger, which is above the warning line of 0.4. It is indicated that the wealth gap mainly comes from the gap between urban and rural areas. On the other hand, the estimation of Gini coefficient using curve-fitting method is as large as more than 0.7, which implies that the wealth gap is highlighted from the analysis of the lowest and highest part of the wealth distribution. All in all, China’s current gap between the poor and the rich is serious. The reform of the income distribution needs to speed up to ensure social harmony and stability.

Keywords

Gini Coefficient; Quintile Rule; Curve-Fitting

Conflicts of Interest

The authors declare no conflicts of interest.

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