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Ranking Inequality: Applications of Multivariate Subset Selection

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Abstract

Inequality measures are often presented in the form of a rank ordering to highlight their relative magnitudes. However, a rank ordering may produce misleading inference, because the inequality measures themselves are statistical estimators with different standard errors, and because a rank ordering necessarily implies multiple comparisons across all measures. Wityhin this setting, if differences between several inequality measures are *simultaneously* and statistically insignificant, the interpretation of the ranking is changed. This study uses a multivariate subset selection procedure to make simultaneous distinctions across inequality measures at a pre-specified confidence level. Three applications of this procedure are explored using country-level data from the Luxembourg Income Study. The findings show that simultaneous precision plays an important role in relative inequality comparisons and should not be ignored.

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Bibliographic Info

Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 70.

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Length: 47 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:max:cprwps:70

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Keywords: income distribution; inference; poverty; subset selection;

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Cited by:
  1. Agostino Tarsitano & Rosetta Lombardo, 2013. "A Coefficient of Correlation Based on Ratios of Ranks and Anti-ranks," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(2), pages 206-224, March.
  2. Agostino Tarsitano & Rosetta Lombardo, 2011. "An Exhaustive Coefficient Of Rank Correlation," Working Papers 201111, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  3. Alfonso Flores-Lagunes & William C. Horrace & Kurt E. Schnier, 2007. "Identifying technically efficient fishing vessels: a non-empty, minimal subset approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 729-745.
  4. Lena Lindahl, 2011. "A comparison of family and neighborhood effects on grades, test scores, educational attainment and income—evidence from Sweden," Journal of Economic Inequality, Springer, vol. 9(2), pages 207-226, June.

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