Coarse codes are widely used throughout the brain to encode sensory an
d motor variables. Methods designed to interpret these codes, such as
population vector analysis, are either inefficient (the variance of th
e estimate is much larger than the smallest possible variance) or biol
ogically implausible, like maximum likelihood. Moreover, these methods
attempt to compute a scalar or vector estimate of the encoded variabl
e. Neurons are faced with a similar estimation problem. They must read
out the responses of the presynaptic neurons, but, by contrast, they
typically encode the variable with a further population code rather th
an as a scalar. We show how a nonlinear recurrent network can be used
to perform estimation in a near-optimal way while keeping the estimate
in a coarse code format. This work suggests that lateral connections
in the cortex may be involved in cleaning up uncorrelated noise among
neurons representing similar variables.