What Is a Lorenz Curve? Given the Income Information for the United

question 273

Essay

What is a Lorenz curve? Given the income information for the United States in 2000 that follows, graphically compare this Lorenz curve with one for an equal distribution.
$\begin{array}{|c|c|}\hline \text { Quintile } & \begin{array}{c}\text { Percent of Total } \\\text { Income }\end{array} \\\hline \text { Lowest } & 3.6 \\\hline \text { Second } & 8.9 \\\hline \text { Middle } & 14.9 \\\hline \text { Fourth } & 23 \\\hline \text { Highest } & 49.6 \\\hline \text { Total } & 100 \\\hline\end{array}$

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Definitions:

Behavioral Economists

Specialists in economics focusing on how psychological, emotional, cultural, and social factors influence the economic decisions of individuals and institutions.

Realized Losses

Losses that occur when an asset is sold for less than its purchase price, thereby converting a theoretical loss into an actual loss.

Aversion

A strong dislike or disinclination towards something, often used in economics in the context of risk aversion.

Overconfidence

The bias in which someone's subjective confidence in their judgements is greater than their objective accuracy.