Analysis of Principal Nonlinear Components for the Construction of a Socioeconomic Stratification Index in Ecuador

Abstract

Socio-economic stratification classifies people or groups of people within a society. Although social stratification is a universal characteristic of human societies, the criteria considered to classify individuals is not unique and some methodological approaches are distinguished. In this article, we build an indicator of socioeconomic stratification for Ecuador through a Nonlinear Principal Components Analysis using data from the 2010 Census. This methodology allows the incorporation of numerical and categorical variables, and nonlinear relationships. The main results suggest that the households located in the urban area show better conditions and greater access to basic services. Also, education positively affects social and economic conditions of both individuals and the households. In light of these results, public policy should target education and public investment in the provision of basic services in rural areas.