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On the Negative Bias of the Gini Coefficient due to Grouping

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  • Matthijs J. Warrens

    (University of Groningen)

Abstract

The Gini coefficient is a measure of statistical dispersion that is commonly used as a measure of inequality of income, wealth or opportunity. Empirical research has shown that the coefficient may have a nonnegligible downward bias when data are grouped. It is unknown under which grouping conditions the downward bias occurs. In this note it is shown that the Gini coefficient strictly decreases if the data are partitioned into equal sized groups.

Suggested Citation

  • Matthijs J. Warrens, 2018. "On the Negative Bias of the Gini Coefficient due to Grouping," Journal of Classification, Springer;The Classification Society, vol. 35(3), pages 580-586, October.
    • Handle: RePEc:spr:jclass:v:35:y:2018:i:3:d:10.1007_s00357-018-9267-9
    DOI: 10.1007/s00357-018-9267-9
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    References listed on IDEAS

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    1. Tom Van Ourti & Philip Clarke, 2011. "A Simple Correction to Remove the Bias of the Gini Coefficient due to Grouping," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 982-994, August.
    2. Lidia Ceriani & Paolo Verme, 2012. "The origins of the Gini index: extracts from Variabilità e Mutabilità (1912) by Corrado Gini," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(3), pages 421-443, September.
    3. Gastwirth, Joseph L, 1972. "The Estimation of the Lorenz Curve and Gini Index," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 306-316, August.
    4. Esmaiel Abounoori & Patrick McCloughan, 2003. "A simple way to calculate the Gini Coefficient for grouped as well as ungrouped data," Applied Economics Letters, Taylor & Francis Journals, vol. 10(8), pages 505-509.
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