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Why not to aggregate up: the influence of aggregation on the ordering of distributions

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  • Stephen Howes

Abstract

Researchers in many fields of economics often compare distributions using some criterion or another of inequality, poverty or welfare. It is standard practice to base such comparative analysis on aggregated data. But will the results obtained be dependent on the degree of aggregation of the data? This paper argues, on the basis of a simulation study, that they will be since the probability of obtaining a ranking can increase rapidly with the degree of aggregation. Aggregation exaggerates the differences between similar distributions and overlooks crossings at the lower tail. A change in research strategy where possible and statistical inference used in its place.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Distributional Analysis Research Programme Papers with number 02.

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Date of creation: Oct 1993
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Handle: RePEc:cep:stidar:02

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

Related research

Keywords: Aggregation; income distribution;

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