### Abstract

Poverty is an important issue that needs to be addressed by all countries. Poverty is related to a group of people earning a low income (lower-tail of the income distribution). In Malaysia, low-income earners are classified as the B40 group. This study aims to describe the behavior of the low-income distribution using the power law model. For this purpose, an inverse Pareto model was applied for describing the lower tail data of Malaysian household income. A robust and efficient estimator, called the probability integral transform statistic estimator, was utilized for estimating the shape parameter of the inverse Pareto distribution. Based on the fitted inverse Pareto model, not all households in the B40 group complied with the power law behavior. However, the power law was able to provide a good description for the group of B40 that was below the poverty line. Based on the inverse Pareto model, the parametric Lorenz curve and the Gini index were derived to provide a robust measure of the income inequality of poor households in Malaysia.

Original language | English |
---|---|

Pages (from-to) | 70-77 |

Number of pages | 8 |

Journal | Mathematics and Statistics |

Volume | 7 |

Issue number | 3 |

DOIs | |

Publication status | Published - 1 Jul 2019 |

### Fingerprint

### Keywords

- Income distribution
- Inequality indices
- Inverse pareto model
- Robust estimation

### ASJC Scopus subject areas

- Statistics, Probability and Uncertainty
- Statistics and Probability
- Economics and Econometrics

### Cite this

*Mathematics and Statistics*,

*7*(3), 70-77. https://doi.org/10.13189/ms.2019.070303

**Power law behavior and tail modeling on low income distribution.** / Masseran, Nurulkamal; Yee, Lai Hoi; Safari, Muhammad Aslam Mohd; Ibrahim, Kamarulzaman.

Research output: Contribution to journal › Article

*Mathematics and Statistics*, vol. 7, no. 3, pp. 70-77. https://doi.org/10.13189/ms.2019.070303

}

TY - JOUR

T1 - Power law behavior and tail modeling on low income distribution

AU - Masseran, Nurulkamal

AU - Yee, Lai Hoi

AU - Safari, Muhammad Aslam Mohd

AU - Ibrahim, Kamarulzaman

PY - 2019/7/1

Y1 - 2019/7/1

N2 - Poverty is an important issue that needs to be addressed by all countries. Poverty is related to a group of people earning a low income (lower-tail of the income distribution). In Malaysia, low-income earners are classified as the B40 group. This study aims to describe the behavior of the low-income distribution using the power law model. For this purpose, an inverse Pareto model was applied for describing the lower tail data of Malaysian household income. A robust and efficient estimator, called the probability integral transform statistic estimator, was utilized for estimating the shape parameter of the inverse Pareto distribution. Based on the fitted inverse Pareto model, not all households in the B40 group complied with the power law behavior. However, the power law was able to provide a good description for the group of B40 that was below the poverty line. Based on the inverse Pareto model, the parametric Lorenz curve and the Gini index were derived to provide a robust measure of the income inequality of poor households in Malaysia.

AB - Poverty is an important issue that needs to be addressed by all countries. Poverty is related to a group of people earning a low income (lower-tail of the income distribution). In Malaysia, low-income earners are classified as the B40 group. This study aims to describe the behavior of the low-income distribution using the power law model. For this purpose, an inverse Pareto model was applied for describing the lower tail data of Malaysian household income. A robust and efficient estimator, called the probability integral transform statistic estimator, was utilized for estimating the shape parameter of the inverse Pareto distribution. Based on the fitted inverse Pareto model, not all households in the B40 group complied with the power law behavior. However, the power law was able to provide a good description for the group of B40 that was below the poverty line. Based on the inverse Pareto model, the parametric Lorenz curve and the Gini index were derived to provide a robust measure of the income inequality of poor households in Malaysia.

KW - Income distribution

KW - Inequality indices

KW - Inverse pareto model

KW - Robust estimation

UR - http://www.scopus.com/inward/record.url?scp=85070955446&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85070955446&partnerID=8YFLogxK

U2 - 10.13189/ms.2019.070303

DO - 10.13189/ms.2019.070303

M3 - Article

AN - SCOPUS:85070955446

VL - 7

SP - 70

EP - 77

JO - Mathematics and Statistics

JF - Mathematics and Statistics

SN - 2332-2071

IS - 3

ER -