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Bottling Up Mr. GINI — Or: Italy’s Wicked Statistician(s)

What does the “GINI” in the standard measurement for income inequality really stand for?

March 27, 2006

What does the "GINI" in the standard measurement for income inequality really stand for?

There are countless ways of assessing social development, such as poverty rates, income measures by population cohorts and mortality rates. One of the most helpful tools to evaluate how a nation’s total income is distributed among its residents is referred to as the Gini coefficient.

According to the Penguin Dictionary of Economics, the Gini coefficient shows “the degree of inequality in a frequency distribution such as personal incomes. If the frequency distribution is equal, the Lorenz curve coincides with the 45° line and G=0.”

In laymen’s terms, the Gini coefficient ranges between 0 and 1. At 0 all members of society have the same income. At 1, one member of society receives the nation’s entire income. Of course, neither extreme is applicable to reality.

Over time, the Gini coefficient has undergone several transformations. First, many publications now use an index based on the coefficient spanning from 0 to 100, instead of a range between 0 and 1. This makes the Gini coefficient more palatable to non-economists, while it does not compromise its statistical accuracy.

Another change has been that all letters of the word GINI are now often capitalized, suggesting that they are representative of a certain acronym. This is where the true mystery of this useful econometric tool is buried. For many years — and long before Wikipedia came into being — I wondered what GINI stood for. Might it be short for “Gross Indicator of National Income”?

I was not convinced, but I was equally unable to come up with any source that would give me a definitive answer. I browsed through all of my economics books and tried to find the meaning of GINI.

Oddly, the acronym was not explained anywhere. My economics dictionaries were no help either. They just explained the mathematical formula and its meaning.

I began a search on the Internet, which was in its infancy at the time. After a while, I struck gold. I cannot recall where and how, but to my surprise I found that GINI was not an acronym, but rather the last name of Corrado Gini, an Italian statistician (1884-1965).

Why then had I never heard of him — and why did it seem that the capitalization of the coefficient named after him would lead many of us to believe that somehow the letters composing GINI had a deeper meaning?

Well, it turns out that Mr. Gini had a dark secret, one that was apparently known well enough, though, by the editors of economics books around the world to expunge his name from the record.

Mr. Gini published his paper on income distribution in 1912, but that was not all he published. Gini also became a great admirer of dictator Benito Mussolini — and an adherent to fascism.

In 1926, Mussolini founded the Central Statistical Institute of Italy (Istat). Istat reported directly to him and was to help give academic credence to his ideology. Il Duce appointed no other than Corrado Gini to become Istat’s first president. Some observers might find that Gini’s 1927 treatise “The Scientific Basis of Fascism” was his humble way of thanking his mentor.

The Gini-Mussolini relationship worked well until Gini became increasingly vociferous about his doubts of fascist demographic policies. His public posturing might have led to government budget cuts for Istat during the economic crisis in 1930/31. That ultimately triggered Gini’s resignation from Istat in December 1931.

For decades, Corrado Gini’s allegiance to — and “scientific” justification of — fascism made him persona non grata among many peers. However, it should be noted that he was awarded several honorary titles in Italy and abroad even after World War II.

By the same token, Gini’s econometric innovation could not be ignored. Hence, economists and editors found themselves in a true moral dilemma, which led most of them to put this Gini in a bottle.

But then the world changed. With the ascension of Gianfranco Fini, youth leader of a “modern” fascist party in Italy in the 1980s, the ideas of “Il Duce” and his supporters found renewed acceptance among many Italians.

Today, Mr. Fini is Deputy Prime Minister and Minister of Foreign Affairs in the government of Silvio Berlusconi.

So it comes as no surprise that, in May 2005, the University of Siena felt at ease to sponsor a conference in honor of Corrado Gini (and of U.S. economist and statistician Max Otto Lorenz).

A brief review of the program of this four-day conference seems to suggest that no specific presentation was set aside to deal with Gini’s dark side.

In fact, on the website introducing the conference, Corrado Gini was nearly glorified as the organizers noted: “C. Gini made an outstanding contribution to teaching, research and public service in Italy and the League of Nations, as well as to national and international scientific associations.

“Since his years as a student of the University of Bologna, C. Gini revealed a truly interdisciplinary interest, including Statistical Methods, Demography, Economics, Econometrics, Sociology, Biology and Philosophy of Sciences.

“In the 20th Century, characterized by scarce interdisciplinary research, Corrado Gini stood as an eminent renaissance man.”

Renaissance man, sure. Oh, by the way, the conference was co-sponsored by Istat. You remember, the statistical institute Mr. Gini used to head at the behest of Mussolini.

And lest anybody think this is all a matter of happenstance, I have bad news. There is another famous Italian economist, Vilfredo Pareto, known for several innovations in the field of economics, such as the Pareto Optimum and the Pareto Law.

The latter is — further coincidence or not — an effort to explain income distribution, or to be more candid, to justify income inequality. Mr. Pareto held that income was distributed in the same way in any country regardless of tax systems or political circumstances. In fact, he supposed that there was a constancy of income distribution across countries and through time.

Pareto died a year after Mussolini took power, but not before he too had shifted his interest to sociology, developed a relationship of mutual admiration with the Italian dictator — and had been showered by him with several honorary titles in 1922.

Pareto's economic innovations were too many and so he gets ample coverage in economic textbooks and dictionaries, albeit less so for his political tendencies. Yet, while Corrado Gini could be described more as an ideological opportunist, Pareto was part of the fascist avant-garde.

In a treatise debunking socialism, he took his first steps toward racism when he wrote in 1902, “If the Negroes were stronger than the Europeans, Europe would be partitioned by the Negroes — and not Africa by the Europeans.”

“For as long as the Europeans are stronger than the Chinese, they will impose their will on them. But if the Chinese should become stronger than the Europeans, then the roles would be reversed, and it is highly probably that humanitarian sentiments could never be opposed with any effectiveness to any army.”

To be sure, being an economist in Italy in the first third of the 20th century turns out to be quite an entangling professional engagement.