Estimating Lorenz Curves Using a Dirichlet Distribution

Duangkamon Chotikapanich and William Griffiths ()

No 802, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: The Lorenz curve relates the cumulative proportion of income to the cumulative proportion of population. When a particular functional form of the Lorenz curve is specified it is typically estimated by linear or nonlinear least squares, estimation techniques that have good properties when the error terms are independently and normally distributed. Observations on cumulative proportions are clearly neither independent nor normally distributed. This paper proposes and applies a new methodology that recognises the cumulative proportional nature of the Lorenz curve data by assuming that the income proportions are distributed as a Dirichlet distribution. Five Lorenz-curve specifications are used to demonstrate the technique. Maximum likelihood estimates under the Dirichlet distribution assumption provide better-fitting Lorenz curves than nonlinear least squares and another estimation technique that has appeared in the literature.

Keywords: Gini coefficient; maximum likelihood estimation (search for similar items in EconPapers)
JEL-codes: C13 C43 D63 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.economics.unimelb.edu.au/downloads/wpapers-00-01/802.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.economics.unimelb.edu.au/downloads/wpapers-00-01/802.pdf [301 Moved Permanently]--> http://fbe.unimelb.edu.au/economics/downloads/wpapers-00-01/802.pdf [301 Moved Permanently]--> https://fbe.unimelb.edu.au/economics/downloads/wpapers-00-01/802.pdf)

Related works:
Journal Article: Estimating Lorenz Curves Using a Dirichlet Distribution (2002)
Working Paper: Estimating Lorenz Curves Using a Dirichlet Distribution (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:802

Access Statistics for this paper

More papers in Department of Economics - Working Papers Series from The University of Melbourne Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Dandapani Lokanathan ().