Estimating Gini Coefficient Based on Hurun Report and Poverty Line

Affiliation(s)

Department of Statistics and Finance, University of Science and Technology of China, Hefei, China.

Department of Statistics and Finance, University of Science and Technology of China, Hefei, China.

ABSTRACT

Based on the review of various methods of estimating Gini
coefficient, the paper applies a quintile rule to estimate Gini coefficient of
rural areas, urban areas and the whole country using the grouped income data of
urban and rural residents. Besides, the paper uses the curve-fitting method to
roughly estimate Gini coefficient from eye-catching Hurun Rich List and the
latest poverty line. The result shows that the estimation of Gini coefficient
using quintile rule is small for both urban and rural area, while the value of
the whole country is obviously larger, which is above the warning line of 0.4.
It is indicated that the wealth gap mainly comes from the gap between urban and
rural areas. On the other hand, the estimation of Gini
coefficient using curve-fitting method is as large as more than 0.7, which
implies that the wealth gap is highlighted from the
analysis of the lowest and highest part of the wealth distribution. All in all,
China’s current gap between the poor and the rich is serious. The reform of the
income distribution needs to speed up to ensure social harmony
and stability.

Cite this paper

Z. Fang, J. Zhu and R. Deng, "Estimating Gini Coefficient Based on Hurun Report and Poverty Line,"*Open Journal of Statistics*, Vol. 3 No. 3, 2013, pp. 167-172. doi: 10.4236/ojs.2013.33018.

Z. Fang, J. Zhu and R. Deng, "Estimating Gini Coefficient Based on Hurun Report and Poverty Line,"

References

[1] C. Gini, “Italian: Variabilità e Mutabilità (Variability and Mutability),” In: E. Pizetti and T. Salvemini, Eds, Memo rie di Metodologica Statistica, Libreria Eredi Virgilio Veschi, Rome, 1955.

[2] H. Dalton, “The Measure of the Inequality of Incomes,” The Economic Journal, Vol. 30, No. 119, 1920, pp. 348-361. doi:10.2307/2223525

[3] Income Distribution Research Group of Nankai University, “Unfair Distribution of Income in China, Present Situation, Origination and Countermeasure,” Nankai Journal, No. 2, 1990, pp. 39-41.

[4] Research Office of the State Council, “Analysis and Proposition about Income Disparity of Urban Residents,” Economic Research Journal, No. 8, 1997. pp. 3-10.

[5] R. W. Zhao, S. Li and L. Carle, “Research on the Income Distribution in China,” China Financial and Economic Publishing House, Beijing, 1999.

[6] B. P. Nuria, “Approximation of Gini Index from Grouped Data,” Working Paper, 2003.

[7] Y. M. Wang, “Comparison of Calculation Methods of Gini Coefficient,” Statistics and Decision, No. 5, 2010, pp. 157-159.

[8] J. B. McDonald and Y. J. Xu, “A Generalization of the Beta Distribution with Application,” Journal of Econometrics, Vol. 69, No. 2, 1995, pp. 427-428. doi:10.1016/0304-4076(94)01680-X

[9] X. R. Chen, “Gini Coefficient and Estimation”, Statistical Research, No. 8, 2004, pp. 58-60.

[10] Q. Z. Chen and J. D. Chen, “A Note to the Lorenz Curve and Gini Coefficient,” Acta Scientiarum Naturalium Universitatis Pekinensis, Vol. 42, No. 5, 2006, pp. 613-619.

[11] B. W. Cheng, “Lorenz Curve and GINI Coefficient under Condition of Lognormal Distribution,” The Journal of Quantitative and Technical Economics, Vol. 22, No. 2, 2005, pp. 127-137.

[12] F. A. Cowell, “Measurement of Inequality,” In: A. Atkirrson and F. Bourguignon, Eds., Handbook of Income Distribution, North-Holland, Amsterdam, 2000.

[13] R. M. Sundrum, “Income Distribution in Less Developed Counties,” Routledge, London and New York, 1990. doi:10.4324/9780203168493

[14] L. Gerber, “A Quintile Rule for the Gini Coefficient,” Mathematics Magazine, Vol. 80, No. 2, 2007, pp. 133-135.

[15] X. B. Qu and Y. Du, “The Regional Income Gap and Changes in Rural China during 1995 to 2008: Based on the Decomposition of Gini Index,” Economic Theory and Business Management, No. 7, 2010, pp. 74-80.

[1] C. Gini, “Italian: Variabilità e Mutabilità (Variability and Mutability),” In: E. Pizetti and T. Salvemini, Eds, Memo rie di Metodologica Statistica, Libreria Eredi Virgilio Veschi, Rome, 1955.

[2] H. Dalton, “The Measure of the Inequality of Incomes,” The Economic Journal, Vol. 30, No. 119, 1920, pp. 348-361. doi:10.2307/2223525

[3] Income Distribution Research Group of Nankai University, “Unfair Distribution of Income in China, Present Situation, Origination and Countermeasure,” Nankai Journal, No. 2, 1990, pp. 39-41.

[4] Research Office of the State Council, “Analysis and Proposition about Income Disparity of Urban Residents,” Economic Research Journal, No. 8, 1997. pp. 3-10.

[5] R. W. Zhao, S. Li and L. Carle, “Research on the Income Distribution in China,” China Financial and Economic Publishing House, Beijing, 1999.

[6] B. P. Nuria, “Approximation of Gini Index from Grouped Data,” Working Paper, 2003.

[7] Y. M. Wang, “Comparison of Calculation Methods of Gini Coefficient,” Statistics and Decision, No. 5, 2010, pp. 157-159.

[8] J. B. McDonald and Y. J. Xu, “A Generalization of the Beta Distribution with Application,” Journal of Econometrics, Vol. 69, No. 2, 1995, pp. 427-428. doi:10.1016/0304-4076(94)01680-X

[9] X. R. Chen, “Gini Coefficient and Estimation”, Statistical Research, No. 8, 2004, pp. 58-60.

[10] Q. Z. Chen and J. D. Chen, “A Note to the Lorenz Curve and Gini Coefficient,” Acta Scientiarum Naturalium Universitatis Pekinensis, Vol. 42, No. 5, 2006, pp. 613-619.

[11] B. W. Cheng, “Lorenz Curve and GINI Coefficient under Condition of Lognormal Distribution,” The Journal of Quantitative and Technical Economics, Vol. 22, No. 2, 2005, pp. 127-137.

[12] F. A. Cowell, “Measurement of Inequality,” In: A. Atkirrson and F. Bourguignon, Eds., Handbook of Income Distribution, North-Holland, Amsterdam, 2000.

[13] R. M. Sundrum, “Income Distribution in Less Developed Counties,” Routledge, London and New York, 1990. doi:10.4324/9780203168493

[14] L. Gerber, “A Quintile Rule for the Gini Coefficient,” Mathematics Magazine, Vol. 80, No. 2, 2007, pp. 133-135.

[15] X. B. Qu and Y. Du, “The Regional Income Gap and Changes in Rural China during 1995 to 2008: Based on the Decomposition of Gini Index,” Economic Theory and Business Management, No. 7, 2010, pp. 74-80.