Upward and Downward Bias When Measuring Inequality of Opportunity

SERIES Working Papers No. 05/2016

15 Pages Posted: 17 Sep 2016

See all articles by Paolo Brunori

Paolo Brunori

Università degli Studi di Bari “Aldo Moro” (UNIBA) - Faculty of Economics

Vito Peragine

Università degli Studi di Bari “Aldo Moro” (UNIBA)

Laura Serlenga

Università degli Studi di Bari; Institute for the Study of Labor (IZA)

Multiple version iconThere are 2 versions of this paper

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

Brunori, Paolo and Peragine, Vito and Serlenga, Laura, Upward and Downward Bias When Measuring Inequality of Opportunity (September 14, 2016). SERIES Working Papers No. 05/2016, Available at SSRN: https://ssrn.com/abstract=2839232 or http://dx.doi.org/10.2139/ssrn.2839232

Paolo Brunori (Contact Author)

Università degli Studi di Bari “Aldo Moro” (UNIBA) - Faculty of Economics ( email )

Piazza Cesare Battisti 1
Bari, Taranto 70121
Italy

Vito Peragine

Università degli Studi di Bari “Aldo Moro” (UNIBA) ( email )

Piazza Umberto I
Bari, 70121
Italy

Laura Serlenga

Università degli Studi di Bari ( email )

Piazza Umberto I
Bari, 70121
Italy

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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