Sensitivity of Inequality Measures to Extreme Values
23 Pages Posted: 21 Feb 2008
Date Written: March 2002
We examine the sensitivity of estimates and inequality indices to extreme values, in the sense of their robustness properties and of their statistical performance. We establish that these measures are very sensitive to the properties of the income distribution. Estimation and inference can be dramatically affected, especially when the tail of the income distribution is heavy.
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