The classification of small areas according to the characteristics of their residents. That is:
- A large geographic area is divided into small areas, most commonly with the goal of assisting in the administration of a national census. For example, the small area may be an area encompassing a few hundred households (e.g., a city block).
- The characteristics of these small areas are then computed by looking at the average properties of the residents (e.g., the average income, the proportion of people aged from 0 to 5).
Common applications of this are:
- Geodemographic Segmentation
- As Contextual Variables in Regression.