Robust Lorenz curves : a semi-parametric approach

Cowell, Frank ORCID: 0000-0002-3778-2152 and Victoria-Feser, Maria-Pia (2001) Robust Lorenz curves : a semi-parametric approach. Distributional Analysis Research Programme; DARP 50 (DARP 50). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Abstract

Lorenz curves and second-order dominance criteria are known to be sensitive to data contamination in the right tail of the distribution. We propose two ways of dealing with the problem: (1) Estimate Lorenz curves using parametric models for income distributions, and (2) Combine empirical estimation with a parametric (robust) estimation of the upper tail of the distribution using the Pareto model. Approach (2) is preferred because of its flexibility. Using simulations we show the dramatic effect of a few contaminated data on the Lorenz ranking and the performance of the robust approach (2). Statistical inference tools are also provided.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://sticerd.lse.ac.uk
Additional Information:	© 2001 Frank Cowell and Maria-Pia Victoria-Feser
Divisions:	Economics STICERD Centre for Analysis of Social Exclusion
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C13 - Estimation D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Date Deposited:	27 Apr 2007
Last Modified:	11 Dec 2024 18:29
URI:	http://eprints.lse.ac.uk/id/eprint/2155

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