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From |
Austin Nichols <austinnichols@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: Computing the Gini or another inequality coefficient from a limited number of data points |

Date |
Fri, 10 Feb 2012 10:30:00 -0500 |

Jen Zhen <jenzhen99@gmail.com>: ssc install dagfit help dagfit for a start, then read the items referred to in that help file. On Fri, Feb 10, 2012 at 3:52 AM, Jen Zhen <jenzhen99@gmail.com> wrote: > Dear list members, > > I would like to compute a measure of income inequality similar to the > Gini index. I do not know everyone's income, so need to make an > approximation. > > (1) > For the 5 most recent years, I know for 6 income brackets how many > individuals there are and their joint income, hence also the average > income in the bracket. For the full-fledged Gini index I would need to > know the area under the curve which shows the cumulative income > against the cumulative number of tax payers (to visualize what I mean, > look e.g. at the 2nd figure here: > http://en.wikipedia.org/wiki/Gini_index). > Now I believe that with the information I have I don't know the entire > curve but I know only 7 points on it (the six points mentioned plus > the origin). So I think I can approximate the said area if I simply > assume that between the 7 points the line is straight, but that will > systematically underestimate the true degree of inequality. So I'm > wondering if there is a sensible way to smooth the curve and hence get > a better approximation? > > (2) > For the 5 earliest years unfortunately I know only the number of > individuals in each bracket but not their joint income. So my idea was > that I would regress the mean income in each bracket on a 3rd-order > function in the year to see how it develops in the 5 latest years and > use this to predict/estimate the mean income for each bracket in the 5 > earlier years, then use the procedure described in (1). A simpler > alternative would be to just use the midpoint of each bracket, but I > guess this would be less good. > > Does this procedure sound sensible? Or is there a better way to > compute inequality from these data? > > Thank you so much and best regards, > JZ * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**Re: st: Computing the Gini or another inequality coefficient from a limited number of data points***From:*Jen Zhen <jenzhen99@gmail.com>

**References**:**st: Computing the Gini or another inequality coefficient from a limited number of data points***From:*Jen Zhen <jenzhen99@gmail.com>

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