Upward and Downward Bias When Measuring Inequality of Opportunity
SERIES Working Papers No. 05/2016
15 Pages Posted: 17 Sep 2016
There are 2 versions of this paper
Upward and Downward Bias When Measuring Inequality of Opportunity
Upward and Downward Bias When Measuring Inequality of Opportunity
Date Written: September 14, 2016
Abstract
We show that, when measuring inequality of opportunity with survey data, scholars incur two types of biases. A well-known downward-bias, due to partial observability of circumstances that affect individual outcome, and an upward bias, which depends on the econometric method used and the quality of the available data. We suggest a simple criterion to balance between the two sources of bias based on cross validation. An empirical application, based on 26 European countries, shows the usefulness of our method.
Keywords: inequality of opportunity, Model selection, Variance-bias trade-off
JEL Classification: C52, D3, D63
Suggested Citation: Suggested Citation