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A Simple Correction to Remove the Bias of the Gini Coefficient due to Grouping

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Author Info

  • Tom Van Ourti

    (Erasmus University Rotterdam, Tinbergen Institute, NETSPAR)

  • Philip Clarke

    (University of Sydney, Australian National University)

Abstract

We propose a first-order bias correction term for the Gini index to reduce the bias due to grouping. It depends on only the number of individuals in each group and is derived from a measurement error framework. We also provide a formula for the remaining second-order bias. Both Monte Carlo and EU and U.S. empirical evidence show that the first-order correction reduces a considerable share of the bias, but that some remaining second-order bias is increasing in the variance. We propose a procedure that addresses the remaining second-order bias by using additional information. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 3 (August)
Pages: 982-994

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Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:982-994

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Cited by:
  1. ERREYGERS, Guido & CLARKE, Philip & VAN OURTI, Tom, 2010. "Mirror, mirror, on the wall, who in this land is fairest of all? Revisiting the extended concentration index," Working Papers, University of Antwerp, Faculty of Applied Economics 2010015, University of Antwerp, Faculty of Applied Economics.
  2. Branko Milanovic, 2012. "Global inequality recalculated and updated: the effect of new PPP estimates on global inequality and 2005 estimates," Journal of Economic Inequality, Springer, Springer, vol. 10(1), pages 1-18, March.
  3. Erreygers, Guido & Clarke, Philip & Van Ourti, Tom, 2012. "“Mirror, mirror, on the wall, who in this land is fairest of all?”—Distributional sensitivity in the measurement of socioeconomic inequality of health," Journal of Health Economics, Elsevier, Elsevier, vol. 31(1), pages 257-270.

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