Question

3. In the real world, we do not usually have nice formulas for the Lorenz Function. Instead, we have a bunch of data points. The following table describes the wealth distribution in the United States in 2016.1 0 0.20.4 0.6 0.8 0.9 0.95 0.99 1 L(p) || 0 -0.008 -0.005 0.019 | 0.101 0.212 0.333 | 0.604 (a) Using the table above, determine what percentage of the wealth in the United States was owned by the richest 1% of the population in 2016. Compare this to the wealth owned by the poorest 95% of the population (b) Plot the data points from the above table on a graph, and connect them to approx- imate the Lorenz Curve c) Using your graph and/or the data in the table, approximate the Equity Gap for the wealth distribution in the United States in 2016.3

Answer 1

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