Abstract-We propose a first-order bias correction term for the Gini index to reduce the bias due to grouping. It depends on only 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 U.S. empirical evidence show that the first-order correction reduces a considerable share of the bias, but that some remaining second-order bias is increasing in the variance. We propose a procedure that addresses the remaining second-order bias by using additional information.

, ,
doi.org/10.1162/REST_a_00103, hdl.handle.net/1765/22118
The Review of Economics and Statistics
Erasmus School of Economics

van Ourti, T., & Clarke, P. (2011). A simple correction to remove the bias of the gini coefficient due to grouping. The Review of Economics and Statistics, 93(3), 982–994. doi:10.1162/REST_a_00103