Structural Equation Models for Dealing With Spatial Confounding. Thaden, H. & Kneib, T. The American Statistician, 72(3):239–252, 2018.
Structural Equation Models for Dealing With Spatial Confounding [link]Paper  doi  abstract   bibtex   
In regression analyses of spatially structured data, it is common practice to introduce spatially correlated random effects into the regression model in order to reduce or even avoid unobserved variable bias in the estimation of other covariate effects. If besides the response the covariates are also spatially correlated, the spatial effects may confound the effect of the covariates or vice versa. In this case, the model fails to identify the true covariate effect due to multicollinearity. For highly collinear continuous covariates, path analysis and structural equation modeling techniques prove to be helpful to disentangle direct covariate effects from indirect covariate effects arising from correlation with other variables. This work discusses the applicability of these techniques in regression setups where spatial and covariate effects coincide at least partly and classical geoadditive models fail to separate these effects.
@article{Thaden2018Structural,
 abstract = {In regression analyses of spatially structured data, it is common practice to introduce spatially correlated random effects into the regression model in order to reduce or even avoid unobserved variable bias in the estimation of other covariate effects. If besides the response the covariates are also spatially correlated, the spatial effects may confound the effect of the covariates or vice versa. In this case, the model fails to identify the true covariate effect due to multicollinearity. For highly collinear continuous covariates, path analysis and structural equation modeling techniques prove to be helpful to disentangle direct covariate effects from indirect covariate effects arising from correlation with other variables. This work discusses the applicability of these techniques in regression setups where spatial and covariate effects coincide at least partly and classical geoadditive models fail to separate these effects.},
 author = {Thaden, Hauke and Kneib, Thomas},
 year = {2018},
 title = {Structural Equation Models for Dealing With Spatial Confounding},
 url = {http://dx.doi.org/10.1080/00031305.2017.1305290},
 keywords = {phd;stat},
 pages = {239--252},
 volume = {72},
 number = {3},
 issn = {0003-1305},
 journal = {The American Statistician},
 doi = {10.1080/00031305.2017.1305290},
 howpublished = {refereed}
}

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