Premium
A Cautionary Note on Estimating the Standard Error of the Gini Index of Inequality *
Author(s) -
Modarres Reza,
Gastwirth Joseph L.
Publication year - 2006
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2006.00167.x
Subject(s) - standard error , index (typography) , statistics , econometrics , mathematics , regression , inequality , gini coefficient , economic inequality , computer science , mathematical analysis , world wide web
We will show that the regression approach to estimating the standard error of the Gini index can produce incorrect results as it does not account for the correlations introduced in the error terms once the data are ordered. To assess the effect of ignoring the correlation in the error terms we examined two distributions and show that the regression method overestimates the standard error of the Gini index. We recommend that the more mathematically complex or computationally intensive methods be used.