Map of Simcoe Muskoka

Determinants Of Health

Income Inequality

Income Inequality

Lorenz Curve and Gini Coefficient

Income Inequality*

Income inequality is the extent to which income is distributed unevenly among a population. According to Statistics Canada Taxfiler data, in 2013 of the total income for Simcoe Muskoka, nearly 24% goes to those who make up the richest 10% of the population, while just 2% goes to the population who make up the poorest 10%. This is a similar when compared to the total Ontario income in 2013, where 27% goes to those who make up the richest 10%, and 1% goes to those who make up the poorest 10%.

161020IncomeInequality2013

*Disclaimer: Statistics Canada makes no representation or warranty as to, or validation of, the accuracy of any Postal CodeOM data.

Lorenz Curve and Gini Coefficient

The Lorenz Curve is a graphical representation that helps us visualize the distribution of wealth in a population. 

By dividing households into quintiles or fifths, the Lorenz Curve shows the cumulative percentage of income received (y-axis) by the cumulative percentage of households (x-axis). If income is equally distributed and every household has the same income, the Lorenz Curve would follow along a 45 degree diagonal line exactly. The extent to which the line of the Lorenz curve diverges from the 45 degree diagonal illustrates where there is inequality of income distribution. Points on the Lorenz curve represent statements like "the bottom 20% of all households has 10% of the total income.”

The Gini Coefficient is a way of attaching a number value to the Lorenz Curve. When we take the area between the 45 degree line and the Lorenz Curve divided by the entire area below the 45 degrees, we get a number between zero and one, where a value of zero means that income is equally spread among households and a value of one means that income is unequally distributed. 

The Gini Coefficient is estimated for Ontario and Simcoe Muskoka using after tax household income derived from 2011 National Household Survey data. Simcoe Muskoka’s Gini Coefficient (0.3385) is lower than Ontario’s (0.3738), suggesting that when compared to Ontario, income is more equally distributed among Simcoe Muskoka households than in Ontario as a whole. Income distribution amongst private households is illustrated in the Lorenz Curve and the difference between Simcoe Muskoka and Ontario is visible in the chart below.

LorenzGini2010