Topics in Spatial Econometrics - With Applications to House Prices

Topics in Spatial Econometrics — With Applications to House Prices Spatial effects in data occur when geographical closeness of observations influences the relation between the observations. When two points on a map are close to each other, the observed values on a variable at those points tend to be similar. The further away the two points are from each other, the less similar the observed values tend to be. Recent technical developments, geographical information systems (GIS) and global positioning systems (GPS) have brought about a renewed interest in spatial matters. For instance, it is possible to observe the exact location of an observation and combine it with other characteristics. Spatial econometrics integrates spatial aspects into econometric models and analysis. The thesis concentrates mainly on methodological issues, but the findings are illustrated by empirical studies on house price data. The thesis consists of an introductory chapter and four essays. The introductory chapter presents an overview of topics and problems in spatial econometrics. It discusses spatial effects, spatial weights matrices, especially k-nearest neighbours weights matrices, and various spatial econometric models, as well as estimation methods and inference. Further, the problem of omitted variables, a few computational and empirical aspects, the bootstrap procedure and the spatial J-test are presented. In addition, a discussion on hedonic house price models is included. In the first essay a comparison is made between spatial econometrics and time series analysis. By restricting the attention to unilateral spatial autoregressive processes, it is shown that a unilateral spatial autoregression, which enjoys similar properties as an autoregression with time series, can be defined. By an empirical study on house price data the second essay shows that it is possible to form coordinate-based, spatially autoregressive variables, which are at least to some extent able to replace the spatial structure in a spatial econometric model. In the third essay a strategy for specifying a k-nearest neighbours weights matrix by applying the spatial J-test is suggested, studied and demonstrated. In the final fourth essay the properties of the asymptotic spatial J-test are further examined. A simulation study shows that the spatial J-test can be used for distinguishing between general spatial models with different k-nearest neighbours weights matrices. A bootstrap spatial J-test is suggested to correct the size of the asymptotic test in small samples.

Gone with the Wind? : Immigrant Women and Transnational Everyday Life in Finland

Increased mass migration, as a result of economic hardship, natural disasters and wars, forces many people to arrive on the shores of cultures very different from those they left. How do they manage the legacy of the past and the challenges of their new everyday life? This is a study of immigrant women living in transnational families that act and communicate across national borders on a near-daily basis. The research was carried out amongst immigrant women who were currently living in Finland. The research asks how transnational everyday life is constructed. As everyday life, due to its mundane nature, is difficult to operationalise for research purposes, mixed data collection methods were needed to capture the passing moments that easily become invisible. Thus, the data were obtained from photographic diaries (459 photographs) taken by the research participants themselves. Additionally, stimulated recall discussions, structured questionnaires and participant observation notes were used to complement the photographic data. A tool for analysing the activities devealed in the data was created on the assumption that a family is an active unit that accommodates the current situation in which it is embedded. Everyday life activities were analysed emphasizing social, modal and spatial dimensions. Important daily moments were placed on a continuum: for me , for immediate others and with immediate others . They portrayed everyday routines and exceptions to it. The data matrix was developed as part of this study. The spatial dimensions formed seven units of activity settings: space for friendship, food, resting, childhood, caring, space to learn and an orderly space. Attention was also paid to the accommodative nature of activities; how women maintain traditions and adapt to Finnish life or re-create new activity patterns. Women s narrations revealed the importance of everyday life. The transnational chain of women across generations and countries, comprised of the daughters, mothers and grandmothers was important. The women showed the need for information technology in their transnational lives. They had an active relationship to religion; the denial or importance of it was obvious. Also arranging one s life in Finnish society was central to their narrations. The analysis exposed everyday activities, showed the importance of social networks and the uniqueness of each woman and family. It revealed everyday life in a structured way. The method of analysis that evolved in this study together with the research findings are of potential use to professionals, allowing the targeting of interventions to improve the everyday lives of immigrants.

Interaction in the Multicultural Classroom : Towards Culturally Sensitive Home Economics Education

Continuous growth in the number of immigrant students has changed the Finnish school environment. The resulting multicultural school environment is new for both teachers and students. In order to develop multicultural learning environments, there is a need to understand immigrant students everyday lives in school. In this study, home economics is seen as a fruitful school subject area for understanding these immigrant students lives as they cope with school and home cultures that may be very different from each other. Home economics includes a great deal of knowledge and skills that immigrant students need during their everyday activities outside of school. -- The main aim of the study is to clarify the characteristics of multicultural home economics classroom practices and the multicultural contacts and interaction that take place between the students and the teacher. The study includes four parts. The first part, an ethnographical prestudy, aims to understand the challenges of multicultural schoolwork with the aid of ethnographical fieldwork done in one multicultural school. The second part outlines the theoretical frames of the study and focuses on the sociocultural approach. The third part of the study presents an analysis of videodata collected in a multicultural home economics classroom. The teacher s and students interaction in the home economics classroom is analyzed through the concepts of the sociocultural approach and the cultural-historical activity theory. Firstly, this is done by analyzing the focusedness of the teacher s and the students actions as well as the questions presented and apparent disturbances during classroom interaction. Secondly, the immigrant students everyday experiences and cultural background are examined as they appear during discussions in the home economics lessons. Thirdly, the teacher s tool-use and actions as a human mediator are clarified during interaction in the classroom. The fourth part presents the results, according to which a practice-based approach in the multicultural classroom situation is a prerequisite for the teacher s and the students shared object during classroom interaction. Also, the practice-based approach facilitates students understanding during teaching and learning situations. Practice in this study is understood as collaborative teaching and learning situations that include 1) guided activating learning, 2) establishing connections with students everyday lives and 3) multiple tool-use. Guided activating learning in the classroom is defined as situations that occur and assignments that are done with a knowledgeable adult or peer and include action. The teacher s demonstrations during the practical part of the lessons seemed to be fruitful in the teaching and learning situations in the multicultural classroom. Establishing connections with students everyday lives motivated students to follow the lesson and supported understanding of meaning. Furthermore, if multiple tools (both psychological and material) were used, the students managed better with new and sometimes difficult concepts and different working habits, and accomplished the practical work more smoothly . The teacher s tool-use and role as a mediator of meaning are also highlighted in the data analysis. Hopefully, this study can provide a seedbed for situations in which knowledge produced together, as well as horizontally oriented tool-use, can make school-learned knowledge more relevant to immigrant students everyday lives, and help students to better cope with both classroom work and outside activities. KEY WORDS: home economics education, multicultural education, sociocultural perspective, classroom interaction, videoanalysis

Factors affecting farmland prices in Finland

The purpose of the study was to analyse factors affecting the differences in land prices between regions. The key issue was to find out the policy effects on farmland prices. In addition to comprehensive literature review, a theoretical analysis as well as modern panel and spatial econometric techniques were utilized. The study clearly pointed out the importance of taking into account the possible spatial dependence. The data were exceptionally large, comprising more than 6 000 observations. Thus, it allowed a thorough econometric estimation including the possibility to take into account the spatial nature of the data. This study supports the view that there are many other factors that affect farmland prices besides pure agricultural returns. It was also found that the support clearly affects land prices. However, rather than assuming the discount rates for support and market returns to be similar, the rough analysis refers to the discount rate for support being a little lower. If this were true it would indicate that farmers rely more on support income than market returns. The results support the view presented in literature that land values are more responsive to government payments when these payments are perceived to be permanent. An important result of this study is that the structural differences between regions and the structural change in agriculture seemed to have a considerable role in affecting land prices. Firstly, the present structure affects the competition in the land market: the more dense farms are in the region the more there are potential buyers, and the land price increases. Secondly, the change in farm structure (especially in animal husbandry) connected to the policy changes that increase area-based support affects land prices. The effect comes from two sources. Growing farms need more land for the manure, and the proportion of retiring farmers may be lower. The introduction of the manure density variable proved to be an efficient way to aggregate the otherwise very difficult task of taking into account the environmental pressure caused by structural change in animal husbandry. Finally, infrastructure also has a very important role in determining the price level of agricultural land. If other industries are prospering in the surrounding area, agricultural viability also seems to improve. The non-farm opportunities offered to farm families make continuing and developing farming more tempting.

Spatial and temporal variability in midge (Nematocera) assemblages in shallow Finnish lakes (60−70 °N) : community-based modelling of past environmental change

Multi- and intralake datasets of fossil midge assemblages in surface sediments of small shallow lakes in Finland were studied to determine the most important environmental factors explaining trends in midge distribution and abundance. The aim was to develop palaeoenvironmental calibration models for the most important environmental variables for the purpose of reconstructing past environmental conditions. The developed models were applied to three high-resolution fossil midge stratigraphies from southern and eastern Finland to interpret environmental variability over the past 2000 years, with special focus on the Medieval Climate Anomaly (MCA), the Little Ice Age (LIA) and recent anthropogenic changes. The midge-based results were compared with physical properties of the sediment, historical evidence and environmental reconstructions based on diatoms (Bacillariophyta), cladocerans (Crustacea: Cladocera) and tree rings. The results showed that the most important environmental factor controlling midge distribution and abundance along a latitudinal gradient in Finland was the mean July air temperature (TJul). However, when the dataset was environmentally screened to include only pristine lakes, water depth at the sampling site became more important. Furthermore, when the dataset was geographically scaled to southern Finland, hypolimnetic oxygen conditions became the dominant environmental factor. The results from an intralake dataset from eastern Finland showed that the most important environmental factors controlling midge distribution within a lake basin were river contribution, water depth and submerged vegetation patterns. In addition, the results of the intralake dataset showed that the fossil midge assemblages represent fauna that lived in close proximity to the sampling sites, thus enabling the exploration of within-lake gradients in midge assemblages. Importantly, this within-lake heterogeneity in midge assemblages may have effects on midge-based temperature estimations, because samples taken from the deepest point of a lake basin may infer considerably colder temperatures than expected, as shown by the present test results. Therefore, it is suggested here that the samples in fossil midge studies involving shallow boreal lakes should be taken from the sublittoral, where the assemblages are most representative of the whole lake fauna. Transfer functions between midge assemblages and the environmental forcing factors that were significantly related with the assemblages, including mean air TJul, water depth, hypolimnetic oxygen, stream flow and distance to littoral vegetation, were developed using weighted averaging (WA) and weighted averaging-partial least squares (WA-PLS) techniques, which outperformed all the other tested numerical approaches. Application of the models in downcore studies showed mostly consistent trends. Based on the present results, which agreed with previous studies and historical evidence, the Medieval Climate Anomaly between ca. 800 and 1300 AD in eastern Finland was characterized by warm temperature conditions and dry summers, but probably humid winters. The Little Ice Age (LIA) prevailed in southern Finland from ca. 1550 to 1850 AD, with the coldest conditions occurring at ca. 1700 AD, whereas in eastern Finland the cold conditions prevailed over a longer time period, from ca. 1300 until 1900 AD. The recent climatic warming was clearly represented in all of the temperature reconstructions. In the terms of long-term climatology, the present results provide support for the concept that the North Atlantic Oscillation (NAO) index has a positive correlation with winter precipitation and annual temperature and a negative correlation with summer precipitation in eastern Finland. In general, the results indicate a relatively warm climate with dry summers but snowy winters during the MCA and a cool climate with rainy summers and dry winters during the LIA. The results of the present reconstructions and the forthcoming applications of the models can be used in assessments of long-term environmental dynamics to refine the understanding of past environmental reference conditions and natural variability required by environmental scientists, ecologists and policy makers to make decisions concerning the presently occurring global, regional and local changes. The developed midge-based models for temperature, hypolimnetic oxygen, water depth, littoral vegetation shift and stream flow, presented in this thesis, are open for scientific use on request.

Spatial variation of climate and the impact of disturbances on local climate and forest recovery in northern Finland

The structure and function of northern ecosystems are strongly influenced by climate change and variability and by human-induced disturbances. The projected global change is likely to have a pronounced effect on the distribution and productivity of different species, generating large changes in the equilibrium at the tree-line. In turn, movement of the tree-line and the redistribution of species produce feedback to both the local and the regional climate. This research was initiated with the objective of examining the influence of natural conditions on the small-scale spatial variation of climate in Finnish Lapland, and to study the interaction and feedback mechanisms in the climate-disturbances-vegetation system near the climatological border of boreal forest. The high (1 km) resolution spatial variation of climate parameters over northern Finland was determined by applying the Kriging interpolation method that takes into account the effect of external forcing variables, i.e., geographical coordinates, elevation, sea and lake coverage. Of all the natural factors shaping the climate, the geographical position, local topography and altitude proved to be the determining ones. Spatial analyses of temperature- and precipitation-derived parameters based on a 30-year dataset (1971-2000) provide a detailed description of the local climate. Maps of the mean, maximum and minimum temperatures, the frost-free period and the growing season indicate that the most favourable thermal conditions exist in the south-western part of Lapland, around large water bodies and in the Kemijoki basin, while the coldest regions are in highland and fell Lapland. The distribution of precipitation is predominantly longitudinally dependent but with the definite influence of local features. The impact of human-induced disturbances, i.e., forest fires, on local climate and its implication for forest recovery near the northern timberline was evaluated in the Tuntsa area of eastern Lapland, damaged by a widespread forest fire in 1960 and suffering repeatedly-failed vegetation recovery since that. Direct measurements of the local climate and simulated heat and water fluxes indicated the development of a more severe climate and physical conditions on the fire-disturbed site. Removal of the original, predominantly Norway spruce and downy birch vegetation and its substitution by tundra vegetation has generated increased wind velocity and reduced snow accumulation, associated with a large variation in soil temperature and moisture and deep soil frost. The changed structural parameters of the canopy have determined changes in energy fluxes by reducing the latter over the tundra vegetation. The altered surface and soil conditions, as well as the evolved severe local climate, have negatively affected seedling growth and survival, leading to more unfavourable conditions for the reproduction of boreal vegetation and thereby causing deviations in the regional position of the timberline. However it should be noted that other factors, such as an inadequate seed source or seedbed, the poor quality of the soil and the intensive logging of damaged trees could also exacerbate the poor tree regeneration. In spite of the failed forest recovery at Tunsta, the position and composition of the timberline and tree-line in Finnish Lapland may also benefit from present and future changes in climate. The already-observed and the projected increase in temperature, the prolonged growing season, as well as changes in the precipitation regime foster tree growth and new regeneration, resulting in an advance of the timberline and tree-line northward and upward. This shift in the distribution of vegetation might be decelerated or even halted by local topoclimatic conditions and by the expected increase in the frequency of disturbances.

Integration of natural hazards, risk and climate change into spatial planning practices

Most countries of Europe, as well as many countries in other parts of the world, are experiencing an increased impact of natural hazards. It is often speculated, but not yet proven, that climate change might influence the frequency and magnitude of certain hydro-meteorological natural hazards. What has certainly been observed is a sharp increase in financial losses caused by natural hazards worldwide. Eventhough Europe appears to be a space that is not affected by natural hazards to such catastrophic extents as other parts of the world are, the damages experienced here are certainly increasing too. Natural hazards, climate change and, in particular, risks have therefore recently been put high on the political agenda of the EU. In the search for appropriate instruments for mitigating impacts of natural hazards and climate change, as well as risks, the integration of these factors into spatial planning practices is constantly receiving higher attention. The focus of most approaches lies on single hazards and climate change mitigation strategies. The current paradigm shift of climate change mitigation to adaptation is used as a basis to draw conclusions and recommendations on what concepts could be further incorporated into spatial planning practices. Especially multi-hazard approaches are discussed as an important approach that should be developed further. One focal point is the definition and applicability of the terms natural hazard, vulnerability and risk in spatial planning practices. Especially vulnerability and risk concepts are so many-fold and complicated that their application in spatial planning has to be analysed most carefully. The PhD thesis is based on six published articles that describe the results of European research projects, which have elaborated strategies and tools for integrated communication and assessment practices on natural hazards and climate change impacts. The papers describe approaches on local, regional and European level, both from theoretical and practical perspectives. Based on these, passed, current and future potential spatial planning applications are reviewed and discussed. In conclusion it is recommended to shift from single hazard assessments to multi-hazard approaches, integrating potential climate change impacts. Vulnerability concepts should play a stronger role than present, and adaptation to natural hazards and climate change should be more emphasized in relation to mitigation. It is outlined that the integration of risk concepts in planning is rather complicated and would need very careful assessment to ensure applicability. Future spatial planning practices should also consider to be more interdisciplinary, i.e. to integrate as many stakeholders and experts as possible to ensure the sustainability of investments.

Geospatial environmental data modelling applications using remote sensing, GIS and spatial statistics

This thesis presents novel modelling applications for environmental geospatial data using remote sensing, GIS and statistical modelling techniques. The studied themes can be classified into four main themes: (i) to develop advanced geospatial databases. Paper (I) demonstrates the creation of a geospatial database for the Glanville fritillary butterfly (Melitaea cinxia) in the Åland Islands, south-western Finland; (ii) to analyse species diversity and distribution using GIS techniques. Paper (II) presents a diversity and geographical distribution analysis for Scopulini moths at a world-wide scale; (iii) to study spatiotemporal forest cover change. Paper (III) presents a study of exotic and indigenous tree cover change detection in Taita Hills Kenya using airborne imagery and GIS analysis techniques; (iv) to explore predictive modelling techniques using geospatial data. In Paper (IV) human population occurrence and abundance in the Taita Hills highlands was predicted using the generalized additive modelling (GAM) technique. Paper (V) presents techniques to enhance fire prediction and burned area estimation at a regional scale in East Caprivi Namibia. Paper (VI) compares eight state-of-the-art predictive modelling methods to improve fire prediction, burned area estimation and fire risk mapping in East Caprivi Namibia. The results in Paper (I) showed that geospatial data can be managed effectively using advanced relational database management systems. Metapopulation data for Melitaea cinxia butterfly was successfully combined with GPS-delimited habitat patch information and climatic data. Using the geospatial database, spatial analyses were successfully conducted at habitat patch level or at more coarse analysis scales. Moreover, this study showed it appears evident that at a large-scale spatially correlated weather conditions are one of the primary causes of spatially correlated changes in Melitaea cinxia population sizes. In Paper (II) spatiotemporal characteristics of Socupulini moths description, diversity and distribution were analysed at a world-wide scale and for the first time GIS techniques were used for Scopulini moth geographical distribution analysis. This study revealed that Scopulini moths have a cosmopolitan distribution. The majority of the species have been described from the low latitudes, sub-Saharan Africa being the hot spot of species diversity. However, the taxonomical effort has been uneven among biogeographical regions. Paper III showed that forest cover change can be analysed in great detail using modern airborne imagery techniques and historical aerial photographs. However, when spatiotemporal forest cover change is studied care has to be taken in co-registration and image interpretation when historical black and white aerial photography is used. In Paper (IV) human population distribution and abundance could be modelled with fairly good results using geospatial predictors and non-Gaussian predictive modelling techniques. Moreover, land cover layer is not necessary needed as a predictor because first and second-order image texture measurements derived from satellite imagery had more power to explain the variation in dwelling unit occurrence and abundance. Paper V showed that generalized linear model (GLM) is a suitable technique for fire occurrence prediction and for burned area estimation. GLM based burned area estimations were found to be more superior than the existing MODIS burned area product (MCD45A1). However, spatial autocorrelation of fires has to be taken into account when using the GLM technique for fire occurrence prediction. Paper VI showed that novel statistical predictive modelling techniques can be used to improve fire prediction, burned area estimation and fire risk mapping at a regional scale. However, some noticeable variation between different predictive modelling techniques for fire occurrence prediction and burned area estimation existed.

Essays on the Economics of Intellectual Property Rights

Väitöskirjassani tarkastelen informaatiohyödykkeiden ja tekijänoikeuksien taloustiedettä kahdesta eri perspektiivistä. Niistä ensimmäinen kuuluu endogeenisen kasvuteorian alaan. Väitöskirjassani yleistän ”pool of knowledge” -tyyppisen endogeenisen kasvumallin tilanteeseen, jossa patentoitavissa olevalla innovaatiolla on minimikoko, ja jossa uudenlaisen tuotteen patentoinut yritys voi menettää monopolinsa tuotteeseen jäljittelyn johdosta. Mallin kontekstissa voidaan analysoida jäljittelyn ja innovaatioilta vaaditun ”minimikoon” vaikutuksia hyvinvointiin ja talouskasvuun. Kasvun maksimoiva imitaation määrä on mallissa aina nolla, mutta hyvinvoinnin maksimoiva imitaation määrä voi olla positiivinen. Talouskasvun ja hyvinvoinnin maksimoivalla patentoitavissa olevan innovaation ”minimikoolla” voi olla mikä tahansa teoreettista maksimia pienempi arvo. Väitöskirjani kahdessa jälkimmäisessä pääluvussa tarkastelen informaatiohyödykkeiden kaupallista piratismia mikrotaloustieteellisen mallin avulla. Informaatiohyödykkeistä laittomasti tehtyjen kopioiden tuotantokustannukset ovat pienet, ja miltei olemattomat silloin kun niitä levitetään esimerkiksi Internetissä. Koska piraattikopioilla on monta eri tuottajaa, niiden hinnan voitaisiin mikrotaloustieteen teorian perusteella olettaa laskevan melkein nollaan, ja jos näin kävisi, kaupallinen piratismi olisi mahdotonta. Mallissani selitän kaupallisen piratismin olemassaolon olettamalla, että piratismista saatavan rangaistuksen uhka riippuu siitä, kuinka monille kuluttajille piraatti tarjoaa laittomia hyödykkeitä, ja että se siksi vaikuttaa piraattikopioiden markkinoihin mainonnan kustannuksen tavoin. Kaupallisten piraattien kiinteiden kustannusten lisääminen on mallissani aina tekijänoikeuksien haltijan etujen mukaista, mutta ”mainonnan kustannuksen” lisääminen ei välttämättä ole, vaan se saattaa myös alentaa laillisten kopioiden myynnistä saatavia voittoja. Tämä tulos poikkeaa vastaavista aiemmista tuloksista sikäli, että se pätee vaikka tarkasteltuihin informaatiohyödykkeisiin ei liittyisi verkkovaikutuksia. Aiemmin ei-kaupallisen piratismin malleista on usein johdettu tulos, jonka mukaan informaatiohyödykkeen laittomat kopiot voivat kasvattaa laillisten kopioiden myynnistä saatavia voittoja jos laillisten kopioiden arvo niiden käyttäjille riippuu siitä, kuinka monet muut kuluttajat käyttävät samanlaista hyödykettä ja jos piraattikopioiden saatavuus lisää riittävästi laillisten kopioiden arvoa. Väitöskirjan viimeisessä pääluvussa yleistän mallini verkkotoimialoille, ja tutkin yleistämäni mallin avulla sitä, missä tapauksissa vastaava tulos pätee myös kaupalliseen piratismiin.