Pull Your Small Area Estimates up by the Bootstraps

Paul Corral Rodas, Isabel Molina and Minh Nguyen

No 9256, Policy Research Working Paper Series from The World Bank

Abstract: After almost two decades of poverty maps produced by the World Bank and multiple advances in the literature, this paper presents a methodological update to the World Bank's toolkit for small area estimation. The paper reviews the computational procedures of the current methods used by the World Bank: the traditional approach by Elbers, Lanjouw and Lanjouw (2003) and the Empirical Best/Bayes (EB) addition introduced by Van der Weide (2014). The addition extends the EB procedure of Molina and Rao (2010) by considering heteroscedasticity and includes survey weights, but uses a different bootstrap approach, here referred to as clustered bootstrap. Simulation experiments comparing these methods to the original EB approach of Molina and Rao (2010) provide empirical evidence of the shortcomings of the clustered bootstrap approach, which yields biased point estimates. The main contributions of this paper are then two: 1) to adapt the original Monte Carlo simulation procedure of Molina and Rao (2010) for the approximation of the extended EB estimators that include heteroscedasticity and survey weights as in Van der Weide (2014); and 2) to adapt the parametric bootstrap approach for mean squared error (MSE) estimation considered by Molina and Rao (2010), and proposed originally by González-Manteiga et al. (2008), to these extended EB estimators. Simulation experiments illustrate that the revised Monte Carlo simulation method yields estimators that are considerably less biased and more efficient in terms of MSE than those obtained from the clustered bootstrap approach, and that the parametric bootstrap MSE estimators are in line with the true MSEs under realistic scenarios.

Keywords: Inequality; De Facto Governments; Public Sector Administrative&Civil Service Reform; Public Sector Administrative and CivilService Reform; Economics and Finance of Public Institution Development; State Owned Enterprise Reform; Democratic Government; Employment and Unemployment; Labor&Employment Law; Adaptation to Climate Change (search for similar items in EconPapers)
Date: 2020-05-21
New Economics Papers: this item is included in nep-cmp
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Citations: View citations in EconPapers (6)

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