The Bias of the Gini Coefficient due to Grouping
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.
|Keywords||Gini Index, first-order correction, grouped data, measurement error|
|JEL||C19, Econometric and Statistical Methods: Other (jel), D31, Personal Income, Wealth, and Their Distributions (jel), I30, Welfare and Poverty: General (jel)|
van Ourti, T.G.M, & Clarke, Ph. (2008). The Bias of the Gini Coefficient due to Grouping (No. TI 2008-095/3). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/14048