Well-being analysis of Italian provinces with spatial principal components

Well-being is a multidimensional concept that cannot be described using a single indicator. By the synthesis of different dimensions it is possible to obtain composite indicators (CIs). Principal Components Analysis (PCA) is one of the most popular multivariate statistical techniques used building CIs. However, the fact that PCA does not take into account the spatial dimension of the phenomenon makes it unsuitable for studying the well-being of urban areas. In this paper, we propose to use Spatial Principal Component Analysis (SPCA) for measuring wellbeing. The SPCA technique provides principal component scores that summarize both the spatial variability and the spatial autocorrelation structure among the statistical units. In this paper, the SPCA is used to construct wellbeing CIs for the Italian provinces.