Modelling Behavioral Data Pattern on Purchasing Power Index and Quality of Life

Langub, MC, Daguplo, MS

Abstract
Quality of life is always defined as a function of purchasing opportunities. Discovering pattern of
relationship among these two variables is the primary objective of this study. Using secondary
data, this exploratory study tries to define a framework that establish a predictive relationship
between these two variables. Visual and Regression analysis revealed that the relationship
between purchasing power index and quality of life among Asian countries can be elucidated in
two possible ways: (i) a linear relationship and (2) quadratic relationship. Furthermore, this study
concludes that the relationship between the two is rooted in the countries culture, norms, and
standards defined basically by their economic history.
Keywords: Economic development, data mining, need acquisition, socialism, western influence
1.0 Introduction
The lives one lead reflects the choices one can make within the bounds of constraints and
information, most particularly, income which contribute to the opportunities that one can have
(Kapteyn, Smith & Soest, 2009; Massam, 2002). Deduction of this statement can possibly reach
to a point that ones quality of life can be defined as a function of opportunities of purchasing
and acquiring needs. Thus, this study holds on the assumption that purchasing power positively
contributes to the quality of life (Eurostat, 2015).
Purchasing Power Index (PPI) can be defined as a price index which provides a measure
of price level differences across countries (Vogel, 2014). It shows relative purchasing power in
buying goods and services in a given city for the average wage in that city. It could also be
thought of as an alternative currency exchange rate, but based on actual prices.
The understanding, measurement, and improvement of quality of life have already been
considered by individual and collaborative researchers, communities and governments
(Costanza, Fisher, Ali, Beer, Bond, et al., 2007) as inputs to craft policies that would facilitate the
realization of a better society & the quality of life that their constituents really desired (Daguplo,
Borong & Yuag, 2015; Tiefenbach & Kohlbacher, 2013). This approach will be helpful in
guiding public policy decision regarding individual and group priorities, as it suggests the ways
in which various needs are differentially important (on average) for different groups (Costanza,
Fisher, Ali, Beer, Bond, et al., 2007).
This study, however, does not only focused on the nature and degree of the relationship
between Purchasing Power Index (PPI) and Quality of Life. It further identifies behavioral
pattern(s) of outliers which are considered anomalous in relation to the distribution, and from
there, design a model that could possibly explain the nature of this anomalous data in relation to
the greater number of data. This study, therefore, tries to develop a theoretical framework that
explains both the observable pattern and the pattern observable of its outliers in order to

understand measures of the quality of life among Asian countries.

2.0 Framework, Design and Method of the Study
This exploratory study tries to define a framework that establish a predictive relationship
between the Purchasing Power Index (PPI) and Quality of Life (QUoL) holding on the positive
relationship assumption between these two variables.
Data-Mining was employed to searched for the data of the thirty-two (32) Asian countries
utilized in this study, Asia: Quality of Life Index by Country 2015 retrieved from
http://www.numbeo.com/quality-of-life/rankings_by_country.jsp?title=2016&region=142.
Visual Analysis of observable patterns of data and deterministic regression analysis was
used to develop a model that best fit the predictive relationship between Purchasing Power Index
(PPI) and Quality of Life (QUoL) among 32 Asian countries.
Table 1.
Asian Countries included in the Study
Rank Country
Quality of Life Index
1
Saudi Arabia
169.37
2
Japan
168.28
3
Turkmenistan
157.09
4
Cyprus
154.91
5
United Arab Emirates
153.68
6
Qatar
144.89
7
Kuwait
123.39
8
Israel
120.43
9
South Korea
120.03
10
Singapore
111.29
11
Taiwan
92.5
12
Malaysia
85.32
13
Bahrain
84.06
14
Hong Kong
82.96
15
Turkey
82.55
16
India
78.6
17
Georgia
64.96
18
Sri Lanka
49.87
19
Armenia
49.07
20
Thailand
47.37
21
Kazakhstan
47
22
Jordan
38.61
23
Philippines
36.95
24
Lebanon
32.81
25
Indonesia
22.7
26
Pakistan
21.82
27
China
15.99
28
Iran
1.07

Purchasing Power Index

126.19
98.21
59.75
71.05
104.59
113.02
85.7
88.18
85.83
75.4
69.9
73.54
59.69
74.93
53.63
65.79
26.21
28.24
27.74
38.75
43.48
38.67
35.41
50.17
26.01
33.21
48.64
30.65

29
30
31
32

Cambodia
Bangladesh
Vietnam
Mongolia

-4.4
-5.36
-19.52
-35.74

11.93
33.43
21.32
23.5

3.0 Result and Discussion

Initial Analysis of PPI QUol Relationship among Asian Countries (N=32)
This study assumed that purchasing power index is a predictive factor of quality life
index among Asian countries (Eurostat, 2015). Analytical results confirm to this hypothesis (pvalue=0.001) and seems to support the common notion that purchasing power index among
Asian countries is a significant predictor of quality of life despite the fact that PPI explains
minimally (R2=77.0%) the quality of life among Asian countries.
The illustrative behavioural pattern of data reflects a linear relationship which can be
economically inferred that purchasing power significantly explains quality of life among Asian
nations. But with minimal R-squared value, such data reflects how purchasing power index of a
nation only indirectly explains quality of life (Quora, 2016). Hypothetically, this opens the
possibility of identifying more latent and overt variables that could substantiate an in-depth
discussion on ones claim of quality of life vis--vis its purchasing power index.
Scatterplot of Quality of Life Index vs Purchasing Power Index
200
1

2
3

Quality of Life Index

150
7
98

10

100

15 13 16

11

12
14

17
18
19

50

25

24
27

28
30

29

20 21
2322
26

31
32

20

40

60

80

100

120

140

Purchasing Power Index

Visual and Regression Analysis of the General Observable Pattern of QUol PPI Relationship
Post-removal of perceived outliers (n=10) reveals a highly observable linear (R 2=94.6%)
and quadratic (R2=95.0%) pattern between QUol PPI relationship. This relationship divulges a
fact that increasing the purchasing capacity of Asian countries (n=23) by multiplying the PPI by
itself does not create a significant difference on the direct linear relation effect of PPI to Quality
of life. One can, therefore, consider purchasing power as a stable linear predictor of lifes quality.
These linear and/or quadratic behaviour reflects a reality that quality of life among some
Asian nation is a function that can be defined partially by its purchasing power index. A basic
characteristic of these countries is well reflected in the graph showing that countries with low
purchasing power also has low quality of life, and countries with high purchasing power has high
quality of life. For some Asian countries, purchasing power defines quality of life.

This relationship, however, does not consider purchasing power as the capacity to buy
material possessions only or else quality of life would be defined solely as a materialistic reality.
Instead, it should be interpreted in such a way that purchasing capacity eventually transformed
into high well-being, according to each individuals preferences, values, free will and capabilities
(Abdallah & Stoll, 2012) and not in terms of material well-being (The Economist, n.d.). To this,
quality of life is being understood as an experience which encompasses both objective factors
(e.g. command of material resources, health, work status, living conditions and many others) and
the subjective perception one has of them (e.g. citizens priorities and needs) (Testa & Simonson,
2016; Huang, 2015; Eurostat, 2015).

Fitted Line Plot

Fitted Line Plot

Quality of Life Index = - 33.50 + 1.704 Purchasing Power Index

Quality of Life Index = - 54.30 + 2.398 Purchasing Power Index

- 0.004866 Purchasing Power Index^2

S
R-Sq
R-Sq(adj)

15.6226
90.8%
90.3%

180

150

100

50

S
15.4702
R-Sq
91.4%
R-Sq(adj)
90.5%

160

Quality of Life Index

Quality of Life Index

200

140
120
100
80
60
40
20

0
20

40

60

80

100

Purchasing Power Index

Linear

120

140

20

40

60

80

100

120

Purchasing Power Index

Polynomial in x

Visual and Regression Analysis of the Anomalous Data of PPI - QUoL Relationship
The remaining 28.12% of the data which seems to be a deviation from the general norm,
moreover, shows a significant pattern worth investigating. The regression analysis of these data
resulted to an R squared of 92.8% denoting a new model that provides another understanding and
consideration in describing the relationship between purchasing power index and the quality of
life among Asian nations.
Visual analysis of the identified Asian countries shows a parabolic graph. These countries
include Armenia, Georgia, Mongolia, Turkmenistan, Cyprus, Sri Lanka, Cambodia, Vietnam and
Japan. These behavioural pattern reveals that despite low purchasing power, high quality of life
was attained by citizens of these countries. For these countries, purchasing power index still
defines quality of life but not the same with the majority of the Asian countries. People of these
countries experienced a certain height of satisfaction despite its low purchasing power index.
PPI-QUoL relationship of these countries is best understood by looking at their historical,
social and cultural past. These countries are basically classified as living the communist and
socialist economic lifestyle - knows only of an equal scale of distribution of the social product
amongst all consumers (Baker, 1990). He added that with this system, labour-power has ceased
to be a commodity which bears a price. With the growth of the social product the share accruing

140

Fitted Line Plot

Quality of Life Index = - 88.18 + 5.897 Purchasing Power Index
- 0.03342 Purchasing Power Index^2
200
J apan

Quality of Life Index

TurkmenistanCyprus

S
R-Sq
R-Sq(adj)

23.4654
92.8%
90.0%

150

100
Georgia
Sri Lanka
Armenia

50

Cambodia

Vietnam

20

40

60

80

100

Purchasing Power Index

to each individual automatically becomes greater if in each single product the principle of a
direct relationship of a producer to a product is given full expression - a situation in which prices
cease to have any meaning.
Morever, in these countries, Block (n.d.) stressed that The process of price formation
sees to it that only the most urgent needs are satisfied, that is to say those needs for the
satisfaction of which a maximum degree of purchasing power can be demanded". Countries that
establish this type of economic distribution underlines the collective expression and providence
to individual needs. In effect, unlike the European and American capitalist idea, in the
communist economy control of prices and demand are completely absent (Block, n.d.).
This fact of economic life which reflects the economic history of these countries
manifests the unusual behavioral pattern on the PPI-QUoL quadratic relationship. These
countries do not require high purchasing power of its constituents to experience an explicable
quality of life. Hypothetically, they would not even consider purchasing power as the ultimate
measure of quality of life. Such mental awareness is conditioned by the norms, policies, and
standards that defines its culture since the beginning of history.
Modelling Asian Purchasing Power Index vis--vis Quality of Life
200
Saudi Arabia

J apan
Turkmenistan

Cyprus

United Arab Emirates

150

Quality of Life Index

The relationship between purchasing

power index and quality of life among Asian
countries can be elucidated in two possible
ways: (i) a linear relationship and (2) quadratic
relationship.

Qatar

Kuwait
South Korea
Israel
Singapore

100

Taiwan
Turkey Bahrain

India

Malaysia
Hong Kong

Georgia
Sri Lanka
Armenia

50

Thailand
Kazakhstan

The PPI-QUoL linear relationship is

manifested by 72% of Asian countries. This
reflects how some Asian countries adopts the
western economic practices define partially by
PPI_1
how much product acquisition defines quality
of life. This explains the materialistic mentality of the American and European society which
until now continue to influence some Asian countries who are open to the new world economic
culture. If perpetuated, western economic power would be unprecedented among some Asian
countries. This is defined by the model below:
J ordan
Philippines

Lebanon

Indonesia Pakistan

China

Iran

Cambodia

Bangladesh

Vietnam

Mongolia

20

40

60

80

100

120

140

QUol = -33.50 + 1.704PPI

which can be explained on how much PPI can positively increase quality of life among Asian
countries.
On the other hand, the PPI-QUoL quadratic relationship as explained by the remaining
35% of Asian countries reflects how influential still is the Marxists theory on equitable economic
distribution. In this economic countries where price and demand is beyond control, instead,
evenly distributed based on social production, acquisition of any material and immaterial goods
does not basically define ones quality of life. The regression model defines as
QUoL = -88.18 + 5.897PPI 0.033PPI^2
explains 93% of the quality of life among Asian countries closed to and far from western
influence. As explained, these countries are satisfied with how much the government can provide
according to their basic needs.
4.0. Conclusion
Quality of life among Asian countries may be explained to some degree by their
purchasing power index. The latter, however, is defined not only by the capacity to buy and
acquire material needs (materialistic and capitalists perspective) but is also ultimately rooted in
the countries culture, norms, and standards defined basically by their economic history.
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