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It does give the motivation: "We show that this heterogeneity is spatial in nature. We also show that in the presence of such spatial heterogeneity, the precis
by crdoconnor 9y ago
It does give the motivation:
"We show that this heterogeneity is spatial in nature. We also show that in the presence of such spatial
heterogeneity, the precision of the individual case study estimates is overstated. By essentially pooling all such local comparisons and allowing for spatial autocorrelation, we address the dual problems of omitted variables bias and bias in the estimated standard errors"
- fiter 9y agoThat states an intuitive statistical fact about spacial unevenness of economics but it does not necessarily correspond to a reasoning why you should add it as a variable. Based on the abstract of this paper, we don't know whether adding a variable will decrease or increase the bias: http://www.sas.rochester.edu/psc/clarke/405/Omit.pdf http://www.sas.rochester.edu/psc/clarke/405/Omit.pdf