Optimized Machine Learning Algorithms for Investigating the Relationship Between Economic Development and Human Capital

Erdemalp Ozden () and Didem Guleryuz ()
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Didem Guleryuz: Bayburt University

Computational Economics, 2022, vol. 60, issue 1, No 14, 347-373

Abstract: Abstract In Economic Development, human capital was previously seen as production factors but gradually evolved into endogenous growth theories. Most of the previous studies have examined the relationships between economic development and human capital via econometric models. Since this relationship is usually nonlinear and machine learning (ML) models can resolve it better, this study investigates the relationships by employing ML methods to provide a new perspective. For this purpose, the optimized ML methods, namely Bayesian Tuned Support Vector Machine and Bayesian Tuned Gaussian Process Regression (BT-GPR), were performed to develop the prediction model for economic development. The hyperparameters have been optimized with the Bayes method by using different kernel functions to increase SVM and GPR methods' predictive performance. The Multiple Linear Regression model has been employed to make a comparison as an econometric model. The performance of the models is evaluated using three statistical metrics, namely, the root mean square error (RMSE), mean absolute error (MAE), and coefficient of determination (R2). The BT-GPR with the exponential kernel model has superior prediction ability with the highest accuracy (R2: 0.9727, RMSE: 0.4022, MAE: 0.3728 in the testing phase). The study shows that the BT-GPR model increases the accuracy of R2 6.4%, RMSE 10.7%, and MAE 1% compared with other developed models.

Keywords: Economic development; Human capital; Production; Optimized hyperparameters; SVM; GPR (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10614-021-10194-7

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