Detecting Public Social Spending Patterns in Italy Using a Three-Way Relative Variation Approach

Studies on public social spending often fail to address the issues connected with budgetary constraints. Budget lines require public entities to partition resources among sectors of spending on the basis of preferred combinations and trade-offs. Standard exploratory tools do not allow to unveil this preference structure as they are hindered by the differences in budget scales and by the bounded nature of sector variability, i.e. an increase in one sector means a missed increase or a decrease in other sectors. In this work Italian public social spending is modeled with an alternative log-ratio methodology which allows to study relative variation patterns among sectors. It is also important to note that since the data is collected across time a three-way approach is recommended so that the variability of each mode is kept separate.