Volatile pies: Modeling compositional volatility Journal Article

Overview

AbstractObjectiveThe study aims to demonstrate the utility of modeling compositional volatility in substantive domains beyond budgeting.MethodsWe show how to model compositional volatility on its own or as a part of a system of equations in which the component parts of the compositional outcome variable are also modeled.ResultsUsing data on the volatility of support for German political parties, we demonstrate the usefulness of stand‐alone models of compositional volatility. Using data on the volatility of income shares in the United States, we demonstrate the usefulness of modeling volatility together with compositional components.ConclusionThere is considerable potential for modeling compositional volatility.