A note on an approximation of the mobile communications expenditures distribution function using a mixture model

Approximating the distribution of mobile communications expenditures (MCE) is complicated by zero observations in the sample. To deal with the zero observations by allowing a point mass at zero, a mixture model of MCE distributions is proposed and applied. The MCE distribution is specified as a mixture of two distributions, one with a point mass at zero and the other with full support on the positive half of the real line. The model is empirically verified for individual MCE survey data collected in Seoul, Korea. The mixture model can easily capture the common bimodality feature of the MCE distribution. In addition, when covariates were added to the model, it was found that the probability that an individual has non-expenditure significantly varies with some variables. Finally, the goodness-of-fit test suggests that the data are well represented by the mixture model.