Smoothing Spline as a Guide to Elaborate Explanatory Modeling

摘要

Although there are substantial theoretical and empirical differences between explanatory modeling and predictive modeling, they should be considered as two dimensions. And predictive modeling can work as a "fact check" to propose improvements to existing explanatory modeling. In this paper, I use smoothing spline, a nonparametric calibration technique which is originally designed to intensify the predictive power, as a guide to revise explanatory modeling. It works for the housing value model of Harrison and Rubinfeld (1978) because the modified model is more meaningful and fits better to actual data.