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Inequality, Entropy and Goodness of Fit

Abstract : Specific functional forms are often used in economic models of distributions; goodness-of-fit measures are used to assess whether a functional form is appropriate in the light of real-world data. Standard approaches use a distance criterion based on the EDF, an aggregation of differences in observed and theoretical cumulative frequencies. However, an economic approach to the problem should involve a measure of the information loss from using a badly-fitting model. This would involve an aggregation of, for example, individual income discrepancies between model and data. We provide an axiomatisation of an approach and applications to illustrate its importance.
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https://halshs.archives-ouvertes.fr/halshs-00591077
Contributor : Anne Peguin-Feissolle <>
Submitted on : Friday, May 6, 2011 - 2:25:53 PM
Last modification on : Wednesday, August 5, 2020 - 3:08:43 AM
Long-term archiving on: : Sunday, August 7, 2011 - 2:45:05 AM

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  • HAL Id : halshs-00591077, version 1

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Frank A. Cowell, Emmanuel Flachaire, Sanghamitra Bandyopadhyay. Inequality, Entropy and Goodness of Fit. 2011. ⟨halshs-00591077⟩

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