Developing Spatial Regression Models

In this chapter, we will be discussing regression models and how they can be improved by incorporating spatial structures. Spatial structures can be an important facet of building into traditional regression models, but they are often overlooked. It is important to consider spatial structures and to build them into a regression model when the process that generated the source data is geographic in nature.

To understand this better, it’s helpful to think through a potential real-world situation. Imagine that you operate a chain of high-end furniture stores and you’re trying to identify the best location for a future storefront that would maximize sales. Sales at your existing stores could be impacted by the number of cars that pass by the store every day, the proximity to other furniture stores, the number of new housing developments in nearby neighborhoods, and the affluence of the population in the vicinity. Each of these potentially...