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The Bias of the Gini Coefficient due to Grouping

Author

Listed:
  • Tom Van Ourti

    (Erasmus University Rotterdam, the Netherlands)

  • Philip Clarke

    (University of Sydney, Australia)

Abstract

Read also the publication in the 'Review of Economics and Statistics' , 2010, 93(3), 982-994. 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.

Suggested Citation

  • Tom Van Ourti & Philip Clarke, 2008. "The Bias of the Gini Coefficient due to Grouping," Tinbergen Institute Discussion Papers 08-095/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20080095
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    References listed on IDEAS

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    Cited by:

    1. Sumudu Perera & Mahinda Siriwardana & Stuart Mounter, 2014. "Reducing poverty and income inequality in Sri Lanka: does trade liberalisation help?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(4), pages 629-655, October.
    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.
    3. Philip Clarke & Tom Van Ourti, 2009. "Correcting the Bias in the Concentration Index when Income is Grouped," CEPR Discussion Papers 599, Centre for Economic Policy Research, Research School of Economics, Australian National University.

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    More about this item

    Keywords

    Gini index; grouped data; measurement error; first-order correction;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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