Cowell, Frank 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: | 15 Sep 2023 22:49 |
| URI: | http://eprints.lse.ac.uk/id/eprint/2155 |
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