Evaluation of technology clubs by clustering: A cautionary note

Antonio Andres, Abraham Otero and Voxi Heinrich Amavilah

MPRA Paper from University Library of Munich, Germany

Abstract: Applications of machine learning techniques to economic problems are increasing. These are powerful techniques with great potential to extract insights from economic data. However, care must be taken to apply them correctly, or the wrong conclusions may be drawn. In the technology clubs literature, after applying a clustering algorithm, some authors train a supervised machine learning technique, such as a decision tree or a neural network, to predict the label of the clusters. Then, they use some performance metric (typically, accuracy) of that prediction as a measure of the quality of the clustering configuration they have found. This is an error with potential negative implications for policy, because obtaining a high accuracy in such a prediction does not mean that the clustering configuration found is correct. This paper explains in detail why this modus operandi is not sound from theoretical point of view and uses computer simulations to demonstrate it. We caution policy and indicate the direction for future investigations.

Keywords: Machine learning; clustering, technological change; technology clubs; knowledge economy; cross-country (search for similar items in EconPapers)
JEL-codes: C45 C53 O38 O57 P41 (search for similar items in EconPapers)
Date: 2021-05-15
New Economics Papers: this item is included in nep-big, nep-cmp, nep-ecm and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Evaluation of technology clubs by clustering: a cautionary note (2021)
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