Abstract
Pareto distribution was formulated to characterise incomes. Generally it is observed that reported incomes are understatements of the true values. Hartley and Revankar (J Econom 2:327–341, 1974) developed a model for underreported income, which was named as Skew log Laplace distribution (SLLD) by Kozubowski and Podgorski (Int Math J 3:467–495, 2003). The main aim of this paper is to develop a distribution of reported income, when reported incomes are mixture of true and underreported incomes. We named this distribution as generalised skew log Laplace distribution (GSLLD) as SLLD is a particular case of GSLLD. The maximum likelihood estimators of the parameters (MLE) of GSLLD when scale parameter is known are obtained and it is proved that MLEs are best asymptotically normal. The confidence intervals of the parameters are provided. The underreported incomes can be analysed using GSLLD or SLLD. The likelihood ratio test is derived to choose between GSLLD and SLLD. Finally, an application of GSLLD to real life income values is presented.
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We sincerely thank the editor-in-chief and the reviewer for their helpful comments and suggestions. We would like to thank Prof. R.N. Rattihalli for helpful discussions.
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Pradnya P. Khandeparkar and V.U. Dixit declare that they have no conflict of interest.
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Khandeparkar, P.P., Dixit, V.U. Generalised Skew Log Laplace Distribution. J Indian Soc Probab Stat 22, 303–318 (2021). https://doi.org/10.1007/s41096-021-00105-2
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DOI: https://doi.org/10.1007/s41096-021-00105-2