ABSTRACT
Describes how spatial relationships between points or areas on a map can be represented using the spatial weights matrix (W). In spatial econometrics this matrix is important particularly in the context of estimating spatial spillover and feedback effects between areas whilst in hierarchical modelling it is particularly important in determining how information is borrowed between areas. Five main methods to define matrix entries are described: contiguity, geographical distance, graph-based methods, attribute-based methods and interaction-based methods. The operation of matrix row standardisation and the construction of higher order weight matrices are described. Approaches to estimating the weights matrix are also discussed. The reader’s attention is drawn to some of the statistical consequences arising from the way W is specified. An appendix shows how to create spatial weight matrices from a shapefile.
