Spatial Econometric Models, Prediction

Definition

Prediction of ex-sample spatially dependent variables not only uses ex-sample independent variables in conjunction with sample estimates of the associated parameters, but also uses the sample residuals and the spatial relations between the sample observations and the ex-sample observations to produce Best Linear Unbiased Predictions (BLUP). For spatial econometric models that specify space via weight matrices, BLUP has a simple and computationally feasible form.

Historical Background

In a GIS context, there are many motivations for conducting spatial prediction. First, a need often exists for accurate prediction, as in the case of real estate where accurate valuation requires use of data from neighboring properties. Second, predictions are smoother than the underlying data, and facilitate construction of easily understood maps. Third, diagnostic maps of predictions and associated residuals can be used to assess the...