A General Method to Create Lorenz Models

ZuXiang Wang, Russell Smyth and Yew-Kwang Ng ()

No 06-09, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: There are currently about two dozen Lorenz models available in the literature for fitting grouped income distribution data. A general method to construct parametric Lorenz models of the weighted product form is offered in this paper. First, a general result to describe the conditions for the weighted product model to be a Lorenz curve, created by using several component parametric Lorenz models, is given. We show that the key property for an ideal component model is that the ratio between its second derivative and its first derivative is increasing. Then, a set of Lorenz models, consisting of a basic group of models along with their convex combinations, is proposed, and it is shown that any model in the set possesses this key property. Equipped with this general result and the model set, we can create a range of different weighted product Lorenz models. Finally, test results are presented which demonstrate that there may be many satisfactory models among those created. The proposed method can be generalized by finding other models with this key property.

Keywords: Lorenz curve; Gini index (search for similar items in EconPapers)
JEL-codes: C5 D3 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.buseco.monash.edu.au/eco/research/paper ... orenzwangsmythng.pdf (application/pdf)

Related works:
Journal Article: A GENERAL METHOD FOR CREATING LORENZ CURVES (2011)
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:mos:moswps:2009-06

Ordering information: This working paper can be ordered from
https://www.monash.e ... esearch/publications

Access Statistics for this paper

More papers in Monash Economics Working Papers from Monash University, Department of Economics Department of Economics, Monash University, Victoria 3800, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Simon Angus ().