On the link between the coefficient of determination and polarization

Working Paper 2011-196

Abstract

In this paper, taking as starting point the link between polarization and dispersion, we reformulate the measure of polarization of Zhang and Kanbur (2001) using the decomposition of the variance instead of the decomposition of the Theil index. The proposed measure is equivalent to the coefficient of determination of an ANOVA Linear Model, that explains the income of the households as a function of any population characteristic e.g. education, gender, occupation etc. This result provides an alternative way to analyze polarization by household characteristics and at the same time allows us to compare sub-populations via the estimated coefficients of the ANOVA model.

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