Bias in economic evaluation of variable rate application based on geographically weighted regression models with misspecified functional form

Abstract

Geographically weighted regression (GWR) has been presented as a valuable tool for estimating site‐specific yield response functions to derive recommendations of variable rate input. This study employs Monte Carlo simulations to illustrate that if GWR assumes a quadratic yield response functional form while the actual yield‐input relationship is quadratic‐plateau, it can significantly overestimate the economic value of variable rate application compared to its true value. Practitioners in precision agriculture should exercise caution when utilizing GWR for site‐specific input recommendations. Statistical community is also encouraged to develop tools in software packages providing GWR that allow more flexibility in functional form assumptions.