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Identifying household finance heterogeneity via deep clustering

Households are becoming increasingly heterogeneous. While previous studies have revealed many important insights (e.g., wealth effect, income effect), they could only incorporate two or three variables at a time. However, in order to have a more detailed understanding of complex household heterogene...

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Detalles Bibliográficos
Autores principales: Hwang, Yoontae, Lee, Yongjae, Fabozzi, Frank J.
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2022
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9491674/
https://www.ncbi.nlm.nih.gov/pubmed/36164486
http://dx.doi.org/10.1007/s10479-022-04900-3
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author Hwang, Yoontae
Lee, Yongjae
Fabozzi, Frank J.
author_facet Hwang, Yoontae
Lee, Yongjae
Fabozzi, Frank J.
author_sort Hwang, Yoontae
collection PubMed
description Households are becoming increasingly heterogeneous. While previous studies have revealed many important insights (e.g., wealth effect, income effect), they could only incorporate two or three variables at a time. However, in order to have a more detailed understanding of complex household heterogeneity, more variables should be considered simultaneously. In this study, we argue that advanced clustering techniques can be useful for investigating high-dimensional household heterogeneity. A deep learning-based clustering method is used to effectively handle the high-dimensional balance sheet data of approximately 50,000 households. The employment of appropriate dimension-reduction techniques is the key to incorporate the full joint distribution of high-dimensional data in the clustering step. Our study suggests that various variables should be used together to explain household heterogeneity. Asset variables are found to be crucial for understanding heterogeneity within wealthy households, while debt variables are more important for those households that are not wealthy. In addition, relationships with sociodemographic variables (e.g., age, education, and family size) were further analyzed. Although clusters are found only based on financial variables, they are shown to be closely related to most sociodemographic variables.
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spelling pubmed-94916742022-09-22 Identifying household finance heterogeneity via deep clustering Hwang, Yoontae Lee, Yongjae Fabozzi, Frank J. Ann Oper Res Original Research Households are becoming increasingly heterogeneous. While previous studies have revealed many important insights (e.g., wealth effect, income effect), they could only incorporate two or three variables at a time. However, in order to have a more detailed understanding of complex household heterogeneity, more variables should be considered simultaneously. In this study, we argue that advanced clustering techniques can be useful for investigating high-dimensional household heterogeneity. A deep learning-based clustering method is used to effectively handle the high-dimensional balance sheet data of approximately 50,000 households. The employment of appropriate dimension-reduction techniques is the key to incorporate the full joint distribution of high-dimensional data in the clustering step. Our study suggests that various variables should be used together to explain household heterogeneity. Asset variables are found to be crucial for understanding heterogeneity within wealthy households, while debt variables are more important for those households that are not wealthy. In addition, relationships with sociodemographic variables (e.g., age, education, and family size) were further analyzed. Although clusters are found only based on financial variables, they are shown to be closely related to most sociodemographic variables. Springer US 2022-09-21 2023 /pmc/articles/PMC9491674/ /pubmed/36164486 http://dx.doi.org/10.1007/s10479-022-04900-3 Text en © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022. Springer Nature or its licensor holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law. This article is made available via the PMC Open Access Subset for unrestricted research re-use and secondary analysis in any form or by any means with acknowledgement of the original source. These permissions are granted for the duration of the World Health Organization (WHO) declaration of COVID-19 as a global pandemic.
spellingShingle Original Research
Hwang, Yoontae
Lee, Yongjae
Fabozzi, Frank J.
Identifying household finance heterogeneity via deep clustering
title Identifying household finance heterogeneity via deep clustering
title_full Identifying household finance heterogeneity via deep clustering
title_fullStr Identifying household finance heterogeneity via deep clustering
title_full_unstemmed Identifying household finance heterogeneity via deep clustering
title_short Identifying household finance heterogeneity via deep clustering
title_sort identifying household finance heterogeneity via deep clustering
topic Original Research
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9491674/
https://www.ncbi.nlm.nih.gov/pubmed/36164486
http://dx.doi.org/10.1007/s10479-022-04900-3
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