Testing Generalized Lorenz Dominance
نویسنده
چکیده
It is well known that the property of generalized Lorenz dominance (GLD) between two distributions is a scaled Lorenz dominance, where the scale factor is the ratio of the two finite positive means. It is convenient to test the GLD property between any pair of distributions because, the property is equivalent to the so-called second order stochastic dominance (SSD), whose statistical tests may be formulated via empirical distributions. The literature has provided many discussions about testing SSD. The aim of this study is to combine a few existing ideas to come up a modified test for SSD, hence a useful test for GLD. Assume without loss of generality the two distributions are supported on a common interval of the non-negative real line. Like the test design of McFadden (1989), we will consider testing the null hypothesis
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