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Re: st: Ginis for negative net worth

 From Stas Kolenikov To statalist@hsphsun2.harvard.edu Subject Re: st: Ginis for negative net worth Date Mon, 5 Jul 2010 10:21:23 -0500

```On Mon, Jul 5, 2010 at 5:32 AM, Nora Müller <nora.mueller@uni-bamberg.de> wrote:
> I'm trying to calculate the gini coefficient for net worth (= financial
> assets + real assets - debts) that has some negative values.
> I do this using the command "inequal7" written by Philippe Van Kerm.
>
> I'm doing an international comparison and for Poland I get a Gini that is
> 1.15. Can anyone help me with the interpretation?
> Why can there be a gini greater than one?

If you look at any of the alternative expressions for the Gini
coefficient (the average of the absolute differences between pairs of
observations; scaled Cov[ income, F(income) ] where F is the cdf), you
will see that they all look like [STUFF]/mu, where mu is the mean
welfare measure for the population (or its sample estimate). When you
study net worth, you may have the net worth to be exactly equal to
zero (if the poor just borrowed from the rich), or even negative (if
everybody borrowed from abroad). So the Gini coefficient may not have
any bounds at all in your application. I am not entirely sure as to
what you can do at all with this; check if Lampert's book or
Sen&Foster's book give any ideas.

BTW, Gini is a name, so you have to capitalize it.

--
Stas Kolenikov, also found at http://stas.kolenikov.name
Small print: I use this email account for mailing lists only.

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