A universal model for the Lorenz curve with novel applications for datasets containing zeros and/or exhibiting extreme inequality

Abstract

AbstractGiven that the existing parametric functional forms for the Lorenz curve do not fit all possible size distributions, a universal parametric functional form is introduced. By using the empirical data from different scientific disciplines and also the hypothetical data, this study shows that, the proposed model fits not only the data whose actual Lorenz plots have a typical convex segment but also the data whose actual Lorenz plots have both horizontal and convex segments practically well. It also perfectly fits the data whose observation is larger in size while the rest of observations are smaller and equal in size as characterized by two positive-slope linear segments. In addition, the proposed model has a closed-form expression for the Gini index, making it computationally convenient to calculate. Considering that the Lorenz curve and the Gini index are widely used in various disciplines of sciences, the proposed model and the closed-form expression for the Gini index could be used as alternative tools to analyze size distributions of non-negative quantities and examine their inequalities or unevennesses.