ON THE RELATIONSHIP BETWEEN THE GINI COEFFICIENT AND INCOME ELASTICITY By NRIPESH PODDER

SUMMARY. The area between the Lorenz curve of income and the concentration curve of expenditure on some item is often used as an overall weighted index of income elasticity minus one. This note shows that the area is in fact a linear transform of the deviation of elasticity from unity estimated at the mean of income, and thus establishes the exact relationship between the area between the curves and elasticity. This facilitates an accurate estimation of the elasticity itself, instead of an index of its deviation, from the values of the concentration index and the Gini index. 1