A Simple Correction to Remove The Bias of The Gini Coefficient Due to Grouping
2010-08-25
Article
pp 109-45.
(Accepted for publication)
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We propose a first-order bias correction term for the Gini index to reduce the bias due to grouping. It only depends upon the number of individuals in each group and is derived from a measurement error framework. We also provide a formula for the remaining second order bias. Both Monte Carlo and EU and US empirical evidence show that the first-order correction reduces a considerable share of the bias, but that there is some remaining second-order bias that is increasing in the variance. We propose a procedure that addresses the remaining second-order bias by using additional information.
Keywords
Automatically Extracted Terms
- income
- group
- correction
- distribution
- gini index
- grouping
- correction term
- equation
- estimate
- index
- table
- country
- covariance
- monte carlo simulations
- inequality
- result
- level
- income group
- simulation
- number
