Comparison of Small Area Procedures based on Gamma Distributions with Extension to Informative Sampling

Abstract

The gamma distribution is a useful model for small area prediction of a skewed response variable. We study the use of the gamma distribution for small area prediction.We emphasize a model, called the gamma-gamma model, in which the area random effects have gamma distributions. We compare this model to a generalized linear mixed model.Each of these two models has been proposed independently in the literature, but the two models have not yet been formally compared. We evaluate the properties of two mean square error estimators for the gamma-gamma model, both of which incorporate corrections for the bias of the estimator of the leading term. Finally, we extend the gamma-gamma model to informative sampling. We conduct thorough simulation studies to assess the properties of the alternative predictors. We apply the proposed methods to data from an agricultural survey.