Policy-related small-area estimation

Nicholas Longford

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

Abstract: A method of small-area estimation with a utility function is developed. The utility characterises a policy planned to be implemented in each area, based on the area's estimate of a key quantity. It is shown by simulations that the commonly applied composite and empirical Bayes estimators are inefficient for a wide range of asymmetric utility functions. Adaptations for limited budget to implement the policy are explored. An argument is presented for a closer integration of estimation and (regional) policy making because no single small- area estimator is suitable for a wide range of purposes.

Keywords: Composition; empirical Bayes; expected loss; borrowing strength; exploiting similarity; small-area estimation; utility function. (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-upt
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