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The Bias of the Gini Coefficient due to Grouping

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  • Tom Van Ourti

    ()
    (Erasmus University Rotterdam)

  • Philip Clarke

    ()
    (University of Sydney)

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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Bibliographic Info

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

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Cited by:
  1. Erreygers G. & Clarke Ph. & Van Ourti T., 2010. "Mirror, mirror, on the wall, who in this land is fairest of all? Revisiting the extended concentration index," Working Papers 2010015, University of Antwerp, Faculty of Applied Economics.
  2. Clarke, Philip & Van Ourti, Tom, 2010. "Calculating the concentration index when income is grouped," Journal of Health Economics, Elsevier, vol. 29(1), pages 151-157, January.

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