Hi Nick,
thank you for the comments, let me make myself more clear then. First
on the reference, here is the additional information for those of you
who are interested:
Chau-Nan Chen Tien-Wang Tsaur; Tong-Shieng Rhai. (1982) The Gini
Coefficient and the Negative Income. Oxford Economic Papers
(pre-1986); Nov 1982; 34, 3, pp. 473-78
On the issue of "fixing the Gini": Chen et al, in their article
suggest that when negative incomes are present regular Gini
coefficient may overestimate the inequality.
I will give the example they use in their article: Consider a
community with ten households with the following incomes ( -500, -300,
-300, -100, 200, 300, 300, 400, 500, 500). Normal Gini coefficient of
such a distribution will be 1.94. When one thinks a case where one
household has all the income and all else has nothing Gini is .99,
then this 1.94 is an overestimation. Cheun et al.'s suggestion is to
correct for this overestimation, which I think is sensible.
Thanks for the comments, and I am looking forward to hear incase
anyone has any experience with calculating Gini coefficients for
datasets with negative incomes,
Yours,
Gul
On 6/6/07, Nick Cox <[email protected]> wrote:
I have only marginal expertise here, but two comments:
1. The reference here is incomplete as you give no
author initials or journal or book details.
2. Clearly negative incomes make sense in your context;
trying to fix the Gini as if they didn't exist seems
to be a denial of this and dubious practice.
Nick
[email protected]
G�l �NAL
> I am working with a large dataset which includes agricultural
> households. Households have negative incomes ( since it is
> agricultural production, income can turn negative in some cases). So,
> my problem is that, when I use ineqdec0, to include negative and zero
> values of income, it gives me gini coefficients that is sometimes
> greater than 1 ( which I calculate for 500 villages) . This is normal,
> because as it is discussed in an article by Chen et al. (1982),
> titled: "The Gini coefficient and negative income" the definition of
> the Gini coefficient allows that to happen when there are negative
> incomes. Chen et al. also suggest a way to normalize it so that Gini
> coefficient would be between 0 and 1 only.
>
> Does anyone know a code or a command in Stata that would do this,
> i.e., normalize the Gini coefficient so that when negative incomes are
> in the data, Gini would not be larger than 1. Since I have been using
> ineqdec0 so far, I am not really familiar with the ado file of it, is
> the only way to go and change the do file based on Chen's suggestion
> to normalize it?
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--
G�l �NAL
Ph.D. Candidate,
Economics, Umass, Amherst
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