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On the identification of extreme outliers and dragon-kings mechanisms in the upper tail of income distribution

Author

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  • Muhammad Aslam Mohd Safari
  • Nurulkamal Masseran
  • Kamarulzaman Ibrahim

Abstract

The presence of extreme outliers in the upper tail data of income distribution affects the Pareto tail modeling. A simulation study is carried out to compare the performance of three types of boxplot in the detection of extreme outliers for Pareto data, including standard boxplot, adjusted boxplot and generalized boxplot. It is found that the generalized boxplot is the best method for determining extreme outliers for Pareto distributed data. For the application, the generalized boxplot is utilized for determining the exreme outliers in the upper tail of Malaysian income distribution. In addition, for this data set, the confidence interval method is applied for examining the presence of dragon-kings, extreme outliers which are beyond the Pareto or power-laws distribution.

Suggested Citation

  • Muhammad Aslam Mohd Safari & Nurulkamal Masseran & Kamarulzaman Ibrahim, 2019. "On the identification of extreme outliers and dragon-kings mechanisms in the upper tail of income distribution," Journal of Applied Statistics, Taylor & Francis Journals, vol. 46(10), pages 1886-1902, July.
    • Handle: RePEc:taf:japsta:v:46:y:2019:i:10:p:1886-1902
    DOI: 10.1080/02664763.2019.1566447
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    Cited by:

    1. Safari, Muhammad Aslam Mohd & Masseran, Nurulkamal & Ibrahim, Kamarulzaman & AL-Dhurafi, Nasr Ahmed, 2020. "The power-law distribution for the income of poor households," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 557(C).
    2. Nurulkamal Masseran, 2022. "Power-law behaviors of the severity levels of unhealthy air pollution events," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 112(2), pages 1749-1766, June.
    3. Muhammad Hilmi Abdul Majid & Kamarulzaman Ibrahim & Nurulkamal Masseran, 2023. "Three-Part Composite Pareto Modelling for Income Distribution in Malaysia," Mathematics, MDPI, vol. 11(13), pages 1-15, June.
    4. Safari, Muhammad Aslam Mohd & Masseran, Nurulkamal & Ibrahim, Kamarulzaman & Hussain, Saiful Izzuan, 2021. "Measuring income inequality: A robust semi-parametric approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 562(C).

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