I am preparing datasets for students in a spatial statistics course for a module on spatial autoregressive models. We will use ArcGIS 10.1. The first dataset will correspond to a mythical pre-industrial village in which houses closest to the tannery will be smaller and more tightly packed and as the distance from the tannery increases, houses will become larger and less tightly packed. Likewise, the property values of houses will increase as distance from tannery increases. NB: Tanneries were historically noxious points that smelled dreadfully and often polluted local waterways.
This example is purposely designed with multicollinearity between distance from tannery and size of house. I want my students to struggle with the question of what is explaining property values so they can understand what multicollinearity means in a concrete example. Later modules will include larger houses near the tannery, as well as smaller houses further from the tannery, so that my students can then use a spatial autoregressive model to identify the effects of positive externalities impacting a small house's property values when it located in a neighborhood with large houses, and the negative externalities impacting a large house located near a tannery.
I currently have a hand-drawn map of this mythical village, and have scanned it as jpg. Each building will have an ID number, a property value, a distance from the tannery and a size in square meters. While I could simply plug these data into Minitab, etc., I want to show my students how to use the spatial autoregressive model function in ArcGIS 10.1 (the proper name from the command escapes me as I type this, but it is under the Spatial Statistics Toolbar). For this function to work, however, I must also project my data. I plan on doing this by selecting a 300m x 300 m polygon somewhere on the globe and simply add control points that arbitrarily line up with my mythical village map (also scaled to capture a 300m x 300m area).
The added benefit of georeference this map is that I can also easily calculate the centers of these structures as well as their areas --- so long as I digitize the buildings.
My question is this: does this sound like a reasonable solution in terms of creating georeferenced and projected data to fit an image for an imaginary village?