SAE Manual Sections 1 to 4_1 (May 06).pdf - National Statistical ...

A Guide to Small Area Estimation - Version 1.1 05/05/2006
3. Some issues in Small Area Estimation
3.1 Sources of Additional Information
The aim of small area estimation is to output a set of reliable estimates for each small
area for the target variable(s) of interest. The challenge therefore, in small area
estimation, is how best to use innovative approaches that take advantage of additional
information to circumvent the small sample size problem and provide estimates with
improved quality. Small area estimation methods are effective when they can draw upon
intrinsic relationships within and between the survey data and other data sources, from
which they borrow strength. These relationships, which are schematically represented in
Figure 3.1, may be found:
o
o
o
o
o
between the survey based direct estimate and auxiliary information available from
administrative data sources, censuses or other surveys or
in correlations between direct estimates observed across time or
in spatial relationships between neighbouring small areas or
in cross-sectional relationships between units with similar characteristics observed in
different small areas within some broader region
or any combinations of the above.
Figure 3.1: Possible sources of additional information
Auxiliary Data
(Demographic
Information)
Cross-sectional
Relationships
Small
Area
Model
Time Series
Relationships
Multivariate
Correlations
Spatial
Effects
It turns out that, in most cases, by far the most important source from which to borrow
strength, is the use of auxiliary data.
Auxiliary data
Australian Bureau of Statistics 14