Small Area Estimation Under a Mixture Model

Small area estimation (SAE) under a linear mixed model may not be efficient if data contain substantial proportion of zeros than would be expected under standard model assumptions (hereafter zero-inflated data). We discuss the SAE for zero-inflated data under a mixture model (Fletcher et al., 2005 and Karlberg, 2000) that account for excess zeros in the data. Our results from simulation studies show that mixture model based approach for SAE works well and produces an efficient set of small area estimates. An application to real survey data from the National Sample Survey Organisation of India demonstrates the satisfactory performance of the approach.