Spatially Varying Coefficients Models: How Maximum Likelihood Estimation Stacks up Against Other Methods

• Activity Number: 308 - Recent Advancements in Spatial and Spatio-Temporal Modeling
• Type: Contributed
• Date/Time: Tuesday, July 30, 2019 : 8:30 AM to 10:20 AM
• Sponsor: Section on Statistics and the Environment
• Author(s): Jakob Dambon* and Reinhard Furrer and Fabio Sigrist
• Companies: University of Zurich and University of Zurich and Lucerne University of Applied Sciences and Arts
• Keywords: spatial statistics; spatially varying coefficients; real estate mass appraisal

Abstract

In regression models for spatial data, it is often assumed that the marginal effects of covariates on the response are constant over space. In practice, this assumption might often be questionable. We show how a Gaussian process-based spatially varying coefficient (SVC) model can be estimated using maximum likelihood estimation (MLE). In addition, we present an approach that scales to large data by applying covariance tapering. We compare our methodology to existing methods such as a Bayesian approach using INLA, geographically weighted regression (GWR), and eigenvector spatial filtering (ESF) in both a simulation study and an application where the goal is to predict prices of real estate apartments in Switzerland. The results from both the simulation study and application show that the MLE approach results in increased predictive accuracy and more precise estimates. In addition, in contrast to existing statistical approaches, our method scales better to data where both the number of spatial points is large and the number of spatially varying covariates is moderately-sized, e.g., above ten.