On Measuring Income Polarization: An Approach Based on Regression Trees | Zendy

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On Measuring Income Polarization: An Approach Based on Regression Trees

Author(s) -

Mauro Mussini

Publication year - 2016

Publication title -

statistics in transition new series

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.155

H-Index - 7

eISSN - 2450-0291

pISSN - 1234-7655

DOI - 10.21307/stattrans-2016-015

Subject(s) - polarization (electrochemistry) , econometrics , regression , regression analysis , homogeneous , logistic regression , decision tree , statistics , variance (accounting) , economics , mathematics , computer science , data mining , accounting , chemistry , combinatorics

This article proposes the application of regression trees for analysing income polarization. Using an approach to polarization based on the analysis of variance, we show that regression trees can uncover groups of homogeneous income receivers in a data-driven way. The regression tree can deal with nonlinear relationships between income and the characteristics of income receivers, and it can detect which characteristics and their interactions actually play a role in explaining income polarization. For these features, the regression tree is a flexible statistical tool to explore whether income receivers concentrate around local poles. An application to Italian individual income data shows an interesting partition of income receivers.

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