On detecting outliers in the Pareto distribution

ABSTRACT

In this paper, we introduce two new statistics for detecting outliers in the Pareto distribution. These new statistics are the extension of the statistics for detecting outliers in exponential and gamma distributions. In fact, we compare the power of our test statistics with the other statistics and select the best test statistic for detecting outliers in the Pareto distribution. Finally, numerical examples of different insurance claims are used to see the performance of the test.

Keywords:

• Dixon's statistic
• JD statistic
• JZ statistic
• T statistic
• $T^{\ast }$ statistic
• Pareto sample
• slippage hypothesis
• test of Chauvenet
• upper outlier
• insurance

Acknowledgments

The author are thankful to the referees for their valuable comments. This research was supported by a grant from Ferdowsi University of Mashhad; No. 2/48143.

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Mehdi Jabbari Nooghabi  http://orcid.org/0000-0002-5636-2209