Canadian Journal of Statistics

Robust small area estimation

Journal Article

Abstract

Small area estimation has received considerable attention in recent years because of growing demand for small area statistics. Basic area‐level and unit‐level models have been studied in the literature to obtain empirical best linear unbiased prediction (EBLUP) estimators of small area means. Although this classical method is useful for estimating the small area means efficiently under normality assumptions, it can be highly influenced by the presence of outliers in the data. In this article, the authors investigate the robustness properties of the classical estimators and propose a resistant method for small area estimation, which is useful for downweighting any influential observations in the data when estimating the model parameters. To estimate the mean squared errors of the robust estimators of small area means, a parametric bootstrap method is adopted here, which is applicable to models with block diagonal covariance structures. Simulations are carried out to study the behaviour of the proposed robust estimators in the presence of outliers, and these estimators are also compared to the EBLUP estimators. Performance of the bootstrap mean squared error estimator is also investigated in the simulation study. The proposed robust method is also applied to some real data to estimate crop areas for counties in Iowa, using farm‐interview data on crop areas and LANDSAT satellite data as auxiliary information. The Canadian Journal of Statistics 37: 381–399; 2009 © 2009 Statistical Society of Canada

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