Incompatibility of estimation and policy objectives. An example from small-area estimation

Nicholas Longford

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We show on an application to small-area statistics that efficient estimation is not always conducive to good policy decisions, because the established inferential procedures have no capacity to incorporate the priorities and preferences of the policy makers and the related consequences of incorrect decisions. A method that addresses these deficiencies is described. We argue that elicitation of the perspectives of the client (sponsor) and their quantification are essential elements of the analysis, because different estimators (decisions) are appropriate for different perspectives. An example of planning an intervention in a country’s districts with high rate of illiteracy is described. In the problem, the established small-area estimators perform poorly because the minimum mean squared error is an inappropriate criterion.

Keywords: Composition; empirical Bayes; expected loss; borrowing strength; exploiting similarity; shrinkage; small-area estimation. (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econ-papers.upf.edu/papers/1447.pdf Whole Paper (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1447

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by (william.carlson@upf.edu this e-mail address is bad, please contact repec@repec.org).