María Dolores Esteban, Domingo Morales (Operations Research Center, University Miguel Hernández of Elche), María José Lombardía (CITIC, Universidade da Coruña), María Esther López-Vizcaíno (Instituto Galego de Estatística, Santiago de Compostela) and Agustín Pérez (Departments of Economic and Financial Studies, University Miguel Hernández of Elche)
Abstract: Under a unit-level bivariate linear mixed model, this paper introduces small area predictors of expenditure means and ratios, and derives approximations and estimators of the corresponding mean squared errors. For the considered model, the REML estimation method is implemented. Several simulation experiments, designed to analyze the behavior of the introduced fitting algorithm, predictors and mean squared error estimators, are carried out. An application to real data from the Spanish household budget survey illustrates the behavior of the proposed statistical methodology. The target is the estimation of means of food and non-food household annual expenditures and of ratios of food household expenditures by Spanish provinces.