Cluster Information of Non-Sampled Area in Small Area Estimation of Poverty Indicators Using Empirical Bayes

Survey is one of data collection method which sampling of individual units from a population. However, national survey only provides limited information which impacts on low precision in small area level. In fact, when the area is not selected as sample unit, estimation cannot be made. Therefore, small area estimation method is required to solve this problem. One of model-based estimation methods is empirical Bayes which has been widely used to estimate parameter in small area, even in non-sampled area. Yet, problems occur when this method is used to estimate parameter of non-sampled area which is solely based on synthetic model which ignore the area effects. This paper proposed an approach to cluster area effects of auxiliary variable by assuming that there are similar among particular area. Direct estimates in several sub-districts in regency and city of Bogor are zero because no household which are under poverty in the sample that selected from these sub-districts. Empirical Bayes method is used to get the estimates are not zero. Empirical Bayes method on FGT poverty measures both Molina & Rao and information clusters have the same estimates in the sub-districts selected as samples, but have different estimates on non-sampled sub-districts. Empirical Bayes methods with information cluster has smaller coefficient of variation. Empirical Bayes method with cluster information is better than empirical Bayes methods without cluster information on non-sampled sub-districts in regency and city of Bogor in terms of coefficient of variation.