Geoadditive Small Area Model for the Estimation of Consumption Expenditure in Albania

In the last few years the demand of spatially detailed statistical data is considerably increased due also to the development of statistical methods for small area. In the past, the high degree of spatial detail of such information was not so useful for practical purposes as firms and local authorities were interested in information aggregated at some pre-specified level. However, the area definition and the assignment of the data to appropriate areas can pose problems in the estimation process. In particular, in small area estimation the importance of this matter is represented by the fact that some parameters of the model can be related to the between-area relationships. Geoadditive models can face this problem analyzing directly the spatial distribution of the study variable while accounting for possible covariate effects. This paper presents the implementation of a geoadditive model to small area estimation. The geoadditive SAE model is apply in order to estimate the district level mean of the household log per-capita consumption expenditure for the Republic of Albania.