Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2008-10-09 Number: 08-095/3 Author-Name: Tom Van Ourti Author-Email: vanourti@few.eur.nl Author-Workplace-Name: Erasmus University Rotterdam, the Netherlands Author-Name: Philip Clarke Author-Email: philipc@health.usyd.edu.au Author-Workplace-Name: University of Sydney, Australia Title: The Bias of the Gini Coefficient due to Grouping Abstract: Read also the publication in the 'Review of Economics and Statistics', 2010, 93(3), 982-994.

We propose a first order bias correction term for the Gini index to reduce the bias due to grouping. The first order correction term is obtained from studying the estimator of the Gini index within a measurement error framework. In addition, it reveals an intuitive formula for the remaining second order bias which is useful in empirical analyses. We analyze the empirical performance of our first order correction term using income data for 15 European countries and the US, and show that it reduces a considerable share of the bias due to grouping. Classification-JEL: C19, D31, I30 Keywords: Gini index, grouped data, measurement error, first-order correction File-Url: https://papers.tinbergen.nl/08095.pdf File-Format: application/pdf File-Size: 506340 bytes Handle: RePEc:tin:wpaper:20080095