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The Bias of the Gini Coefficient due to Grouping

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Author Info
Tom Van Ourti () (Erasmus University Rotterdam)
Philip Clarke () (University of Sydney)

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Abstract

We propose a first order bias correction term for the Gini index to reduce the bias due to grouping. The first order correction term is obtained from studying the estimator of the Gini index within a measurement error framework. In addition, it reveals an intuitive formula for the remaining second order bias which is useful in empirical analyses. We analyze the empirical performance of our first order correction term using income data for 15 European countries and the US, and show that it reduces a considerable share of the bias due to grouping.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-095/3.

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Date of creation: 09 Oct 2008
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Handle: RePEc:dgr:uvatin:20080095

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Related research
Keywords: Gini index; grouped data; measurement error; first-order correction;

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Find related papers by JEL classification:
C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Other
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General

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