An approximation to the optimal subsample allocation for small areas

Abstract

This paper develops allocation methods for stratified sample surveys in which small area estimation is a priority. We assume stratified sampling with small areas as the strata. Similar to Longford (2006), we seek efficient allocation that minimizes a linear combination of the mean squared errors of composite small area estimators and of an estimator of the overall mean. Unlike Longford, we define mean-squared error in a model-assisted framework, allowing a more natural interpretation of results using an intra-class correlation parameter. This allocation has an analytical form for a special case, and has the unappealing property that some strata may be allocated no sample. We derive a Taylor approximation to the stratum sample sizes for small area estimation using composite estimation giving priority to both small area and national estimation.