A simple correction to remove the bias of the Gini coefficient due to grouping

  • Philip Clarke Philip Clarke
  • Tom Van Ourti Tom Van Ourti

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.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

MORE ABOUT NETSPAR


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2023-2027           •           Researchagenda

ABOUT NETSPAR

Our partners

B20231704_DNB_Blacklogo
svb
B20211216_shell download
B20160708_uva
B20200924_Ortec Finance logo 250px_banner_small
View all partners