Mobility Index

From Open Risk Manual

Definition

Mobility Index is any scalar indicator of the relative rates of migration of entities between different states.

Contexts

Mobility indexes are constructed and used in a wide variety of contexts, indicatively:

  • Social Mobility (in terms of educational / professional status)
  • Economic (Income or Wealth) Mobility
  • Spatial Mobility
  • Demographic Mobility (relocation of the permanent residence of people as measured for example by the Rank Mobility Index
  • Credit Rating Mobility

Construction

  • The construction of a Mobility Index may involve first the construction of a Transition Matrix. This is typically required when the underlying Characteristic, feature, property or attribute has a continuous State Space which can be converted to a meaningful discrete space using variable bins.
  • Given a transition matrix over successive periods one calculates a scalar indicator on the basis of changes in the matrix elements. Examples are listed below and documented in individual pages

Formula

An index of mobility is defined as a continuous real function M(*) over the set of transition matrices P[1]

Special Cases

  • Immobility
  • Complete Mobility

List of Mobility Indexes

Issues and Challenges

  • There is a broader use of the term index to mean any quantitative indicator comparing two distributions (without any explicit presence of discrete states). This can be done e.g., on the basis of correlations or using a Concentration Index.

References

  1. A. F. Shorrocks Source: Econometrica, Vol. 46, No. 5 (Sep., 1978)

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