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Asymptotic Versus Bootstrap Inference for Inequality Indices of the Cumulative Distribution Function

Author

Listed:
  • Ramses Abul Naga

    (Business School, University of Aberdeen, Old Aberdeen AB24 3UE, UK)

  • Christopher Stapenhurst

    (Department of Economics, University of Edinburgh, Edinburgh EH8 9AB, UK)

  • Gaston Yalonetzky

    (Business School, University of Leeds, Leeds LS2 9JT, UK)

Abstract

We examine the performance of asymptotic inference as well as bootstrap tests for the Alphabeta and Kobus–Miłoś family of inequality indices for ordered response data. We use Monte Carlo experiments to compare the empirical size and statistical power of asymptotic inference and the Studentized bootstrap test. In a broad variety of settings, both tests are found to have similar rejection probabilities of true null hypotheses, and similar power. Nonetheless, the asymptotic test remains correctly sized in the presence of certain types of severe class imbalances exhibiting very low or very high levels of inequality, whereas the bootstrap test becomes somewhat oversized in these extreme settings.

Suggested Citation

  • Ramses Abul Naga & Christopher Stapenhurst & Gaston Yalonetzky, 2020. "Asymptotic Versus Bootstrap Inference for Inequality Indices of the Cumulative Distribution Function," Econometrics, MDPI, vol. 8(1), pages 1-15, February.
    • Handle: RePEc:gam:jecnmx:v:8:y:2020:i:1:p:8-:d:325486
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    References listed on IDEAS

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    1. Abul Naga, Ramses H. & Stapenhurst, Christopher, 2015. "Estimation of inequality indices of the cumulative distribution function," Economics Letters, Elsevier, vol. 130(C), pages 109-112.
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    Cited by:

    1. Kobus, Martyna & Kurek, Radosław, 2023. "Measuring inequality in the joint distribution of socioeconomic status and health," Economics Letters, Elsevier, vol. 226(C).
    2. Ramses H. Abul Naga & Christopher Stapenhurstz & Gaston Yalonetzky, 2021. "Inferring Inequality: Testing for Median-Preserving Spreads in Ordinal Data," Working Papers 2021-01, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.

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