Defining Neighborhood Boundaries: Are Census Tracts Obsolete

47 Pages Posted: 20 Dec 2003

See all articles by John M. Clapp

John M. Clapp

University of Connecticut - Department of Finance; Homer Hoyt Institute

Yazhen Wang

University of Wisconsin - Madison - Department of Statistics; National Science Foundation

Date Written: August 26, 2005


Residential neighborhoods are defined as convex geographical areas containing similar populations and roughly homogenous housing markets. Neighborhoods are relevant largely because confidentiality requires spatial aggregation of data collected at the household level.

A hedonic model using individual sales transactions and their street addresses is combined with CART (Classification and Regression Trees) to define the optimal number of neighborhoods and to place neighborhood boundaries in one Connecticut town. There are about half the number of CART neighborhoods than there are census tracts. Moreover, the CART boundaries typically run behind the houses rather than down the middle of the street, and they reduce residual variation.

The CART model is important to the submarkets literature, which aggregates neighborhoods into larger homogenous markets. Moreover, anisotropic spatial autocorrelation can be modeled with CART neighborhoods.

Keywords: GIS, Neighborhoods, CART, classification and regression trees, hedonic models, submarkets, anisotropic spatial autocorrelation

JEL Classification: R1, R5, C1

Suggested Citation

Clapp, John M. and Wang, Yazhen, Defining Neighborhood Boundaries: Are Census Tracts Obsolete (August 26, 2005). Available at SSRN: or

John M. Clapp (Contact Author)

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-983-3685 (Phone)
860-486-0349 (Fax)

Homer Hoyt Institute ( email )

United States


Yazhen Wang

University of Wisconsin - Madison - Department of Statistics ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

National Science Foundation

4201 Wilson Boulevard
Arlington, VA 22230
United States

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