Asymptotic and bootstrap inference for inequality and poverty measures

Russell Davidson and Emmanuel Flachaire

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: A random sample drawn from a population would appear to offer an ideal opportunity to use the bootstrap in order to perform accurate inference, since the observations of the sample are IID. In this paper, Monte Carlo results suggest that bootstrapping a commonly used index of inequality leads to inference that is not accurate even in very large samples. Bootstrapping a poverty measure, on the other hand, gives accurate inference in small samples. We investigate the reasons for the poor performance of the bootstrap, and find that the major cause is the extreme sensitivity of many inequality indices to the exact nature of the upper tail of the income distribution. Consequently, a bootstrap sample in which nothing is resampled from the tail can have properties very different from those of the population. This leads us to study two non-standard bootstraps, the m out of n bootstrap, which is valid in some situations where the standard bootstrap fails, and a bootstrap in which the upper tail is modelled parametrically. Monte Carlo results suggest that accurate inference can be achieved with this last method in moderately large samples

Keywords: Bootstrap; statistical performance; inequality measures; poverty measures (search for similar items in EconPapers)
JEL-codes: C1 D63 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-03
New Economics Papers: this item is included in nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/V04100.pdf (application/pdf)

Related works:
Journal Article: Asymptotic and bootstrap inference for inequality and poverty measures (2007)
Working Paper: Asymptotic and bootstrap inference for inequality and poverty measures (2007)
Working Paper: Asymptotic and bootstrap inference for inequality and poverty measures (2007)
Working Paper: ASYMPTOTIC AND BOOTSTRAP INFERENCE FOR INEQUALITY AND POVERTY MEASURES (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:v04100

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