Hybrid Ranking Proposal Based on Spatial Econometrics: An Example of European Economic Freedoms
Serkan Cahit Dinç, Necati Alp ErilliData sorting and index research are any processesthatinclude arranging data in a meaningful orderto aid comprehension, analysis, or visualization. When working with research data, sorting is a frequent strategy for displaying data in a way that makesthe story that the data tells more understandable. In thisresearch, a hybrid method involving spatial econometrics, fuzzy clustering analysis, and multicriteria decision making was proposed for a unified measure ranking of the quality of political–economic institutions in different jurisdictions such as economic freedoms. The suggested technique was calculated and compared using the Heritage Foundation economic freedom statistics for the years 2019, 2020, and 2021. Between the derived findings and original results, a correlation coefficient of 92% was computed. The proposed strategy is effective in comparable socioeconomic ranking and index research.
Mekânsal Ekonometri Tabanlı Karma Sıralama Önerisi: Avrupa Ekonomik Özgürlükler Örneği
Serkan Cahit Dinç, Necati Alp ErilliVeri Sıralama ve Endeks çalışmaları, verilerin anlaşılmasını, analiz edilmesini veya görselleştirilmesini kolaylaştırmak için anlamlı bir düzende düzenlenmesini içeren herhangi bir işlemdir. Araştırma verileriyle çalışırken sıralama, verilerin anlatıldığı öykünün anlaşılmasını kolaylaştıran bir biçimde verileri görselleştirmek için kullanılan yaygın bir yöntem olarak karşımıza çıkmaktadır. Bu çalışmada, Ekonomik Özgürlükler gibi farklı yargı alanlarındaki politik-ekonomik kurumların kalitesinin birleşik bir ölçü sıralaması için Mekânsal Ekonometri, Bulanık Kümeleme Analizi ve Çok Kriterli Karar Verme konularını içeren hibrit bir yöntem önerilmiştir. Önerilen yöntem Heritage Vakfı Ekonomik Özgürlük verileri üzerinde hesaplanmış ve 2019, 2020 ve 2021 yılları için karşılaştırılmıştır. Elde edilen sonuçlar ile orijinal sonuçlar arasında %92’lik korelasyon katsayısı hesaplanmıştır. Önerilen yöntemin benzersosyo-ekonomik sıralama ve endeks çalışmalarında başarılı bir şekilde kullanılabileceği görülmüştür.
An index can be defined in statistical research as a measure of change in a representative sample of individual data points, or as a composite measure that combines many indicators. Indices, sometimes known as composite indicators, are used to summarize and categorize individual data. In this manner, the researcher can evaluate the subject under investigation using criteria, such as good to poor, strong to weak, remote close, and make conclusions regarding the study subject. In this research, a new index ranking calculation is proposed using economic freedom data. In the proposed method, a hybrid approach was presented, in which spatial econometrics, fuzzy C-means from fuzzy clustering analysis methods, and COPRAS methods from multicriteria decision-making (MCDM) methods are used together. The purpose of this strategy is to calculate a sorting method with spatial connection coefficients as input, fuzzy C-means, and data as the output of the process and COPRAS method.
The subject of economic freedom is a concept that covers the entire concepts of freedom of choice, exchange, and competition, and protection of property. In other words, economic independence may be defined as an individual managing their property and labor without regard for the constraints imposed by the state or other groups. It is the most basic right of individuals to engage in economic activities using their rights over their property within legal frameworks and gains as a result of these activities in the areas they desire. Governments should also protect people’s property rights and enable free movement of labor, capital, products, and services that enable activities like production, consumption, and investment. There are independent organizations, such as the Fraser Institute, The Heritage Foundation, the Cato Institute, and Freedom House that work on measuring economic freedom around the world. With the studies they issue each year, these organizations examine the state of countries in terms of economic freedom. Governments and business companies may monitor the changes in the nations of interest for each year and accordingly launch or amend their investments based on these reports released under various data categories.
Spatial econometrics is a subscience of econometrics that focuses on combining spatial influence with econometric methods. This discipline of study is primarily concerned with spatial effects, which show the pattern of spatial decoupling. The interaction between the geographic domain, which is described in terms of spaces, horizontal cross section dependency, which is a subset of spatial dependence, and cross sectional heterogeneity, which is a subset of spatial heterogeneity, may result in. The dependency structure can be related to distance and location, and this structure can be seen in a geographical area, as well as in an economic or social network area.
Clustering analysis is one of the most widely used methods in classification studies. Clustering analysis is a method for classifying the units analyzed in research by grouping them according to their resemblance, identifying the common qualities of the units, and making broad assumptions about these classes. The purpose here is to categorize ungrouped data based on similarities and assist the researcher in obtaining relevant and valuable summary information. Fuzzy clustering is recommended as an appropriate method if the sets are not fully and precisely separated from each other or there are suspicious situations in which set some observations are elements.
Fuzzy sets, collections of observations in which the membership record is specified between 0 and 1, decide each observation function. Observations that have a high degree of membership in the same cluster are quite comparable. Each observation does not have to be included in only one set in fuzzy clustering. In this method, observations belong to clusters with certain degrees of membership, and information about the observations’ membership to other clusters is obtained.
MCDM methods are used when it is necessary to assess a large number of alternatives under a large number of criteria.
Individuals, corporations, and organizations encounter multidimensional choice challenges in their daily lives. Managers frequently make judgments when several factors and competing goals (criteria) must be met. MCDM techniques consist of approaches and methods that try to reach a possible “best/appropriate” solution that meets multiple conflicting criteria. Decision-makers can make scientific and more successful decisions using MCDM techniques to overcome such problems.
A hybrid technique integrating geographical econometrics, fuzzy clustering analysis, and MCDM was developed in this work for a unified measure ranking of the quality of political–economic institutions in various jurisdictions, such as economic liberties. The proposed method was calculated on the Heritage Foundation economic freedom data and compared for the years 2019, 2020, and 2021. The suggested method’s rankings for three separate eras were calculated as 88.6%, 91.7%, and 92.7%, with correlation values with the original Heritage Foundation rankings. These high correlation values were also found to be significant at 1%. The high correlation values of the findings acquired in the index sorting research developed to suggest that the proposed hybrid approach may then be employed in additional index computations, according to the results.
