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      Spatial correlation in household choices in rural Indonesia

      Gibson, John; Kim, Bonggeun; Olivia, Susan
      DOI
       10.1111/j.1467-8381.2011.02063.x
      Link
       onlinelibrary.wiley.com
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      Citation
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      Gibson, J., Kim, B. & Olivia, S. (2011). Spatial correlation in household choices in rural Indonesia. Asian Economic Journal, 25(3), 271-289.
      Permanent Research Commons link: https://hdl.handle.net/10289/5860
      Abstract
      Many household choices in developing economies are correlated with choices of nearby households, because nearby locations have unobserved factors in common and households and their neighbors interact. However, models recognizing these spatial correlations are rarely used because few surveys give exact household locations. In the present paper, we use unusual data from rural Indonesia, where distances between households can be measured, to examine spatial effects in equations for non-farm enterprises' share of household incomes and food's share of total household budgets. Our results indicate that ignoring spatial correlations in household choices might cause bias and inferential errors and could distort recommended policy interventions aiming to raise living standards in rural Asia.
      Date
      2011-09
      Type
      Journal Article
      Publisher
      Wiley
      Collections
      • Management Papers [1161]
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