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Spatial heterogeneity and spatial bias analyses in hedonic price models: some practical considerations

Khalid, Haniza (2015) Spatial heterogeneity and spatial bias analyses in hedonic price models: some practical considerations. Bulletin of Geography Socio-economic Series, 28. pp. 113-129. ISSN 1732 - 4254

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A great number of contemporary studies are incorporating explicit consideration of spatial effects in the estimation of hedonic price functions. At the most basic level, interactive spatial regime models are employed to detect the presence of spatial heterogeneity in datasets. A full-scale spatial analysis would include determination and adjustments for spatial lag and spatial error dependences. However, there is still plenty of room for future research to help unravel the numerous modelling and practical issues associated with a comprehensive spatial examination, such as the specification of the spatial dependence structure or functional 'neighbourhoods'. Another important issue relates to the use of spatial multipliers to filter spatial bias particularly in models which use log-transformed variables. Estimation of a hedonic price function using Malaysian dataset of agricultural land sale values indicates spatial disaggregation and spatial dependence. However, diagnostic tests and actual estimation of spatial models do not always provide unambiguous conclusions while predicted errors do not vary all that much from those generated by simpler models. Despite the conceptual appeal of spatial analyses, the inefficiency attributable to spatial biases may not be large enough to cause critical errors in policy decisions.

Item Type: Article (Journal)
Additional Information: 3350/42869
Uncontrolled Keywords: hedonic price analysis,agricultural land prices,spatial heterogeneity,spatial dependence
Subjects: H Social Sciences > HA Statistics > HA29 Theory and method of social science statistics
H Social Sciences > HD Industries. Land use. Labor > HD1401 Agriculture
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User: Dr. Haniza Khalid
Date Deposited: 15 May 2015 08:30
Last Modified: 19 Jan 2016 11:46
URI: http://irep.iium.edu.my/id/eprint/42869

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