The Lorenz Curve

The Lorenz curve is the graphical / visual representation of income or wealth distribution developed by American economist Max Lorenz in 1905.

It is drawn as a cumulative income curve. A population is divided into quintiles: The richest quintile is the 20% of households with the highest disposable income. Similarly, the poorest quintile is the 20% of households with the lowest disposable income.

The Lorenz Curve can then be contrasted with the line of perfect equality to show the scale of income and wealth inequality in a country.