Choosing Between Two Income Distribution Models with Contaminated Data

Maria-Pia Victoria-Feser ()

STICERD - Distributional Analysis Research Programme Papers from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: Choosing between two income distribution models typically involves testing two non-tested hypotheses, that is hypotheses such that one cannot be obtained as a special or limiting case of the other. Cox (1961, 1962) proposed a classical testing procedure based on the comparison of the maximised likelihood functions for the two models. In this paper it is shown that such a procedure is not robust in that a single observation can reverse the decision. Its robustness properties as well as other properties are shown in simulated examples

Keywords: M-estimators; model choice; robust tests; income distribution; linear regression (search for similar items in EconPapers)
Date: 1996-03
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stidar:18

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