Hierarchical Bayes multivariate estimation of poverty rates based on increasing thresholds for small domains

A model-based small area method for calculating estimates of poverty rates based on different thresholds for subsets of the Italian population is proposed. The subsets are obtained by cross-classifying by household type and administrative region. The suggested estimators satisfy the following coherence properties: (i) within a given area, rates associated with increasing thresholds are monotonically increasing; (ii) interval estimators have lower and upper bounds within the interval (0, 1); (iii) when a large domain-specific sample is available the small area estimate is close to the one obtained using standard design-based methods; (iv) estimates of poverty rates should also be produced for domains for which there is no sample or when no poor households are included in the sample. A hierarchical Bayesian approach to estimation is adopted. Posterior distributions are approximated by means of MCMC computation methods. Empirical analysis is based on data from the 2005 wave of the EU-SILC survey. (C) 2010 Elsevier B.V. All rights reserved.