Small area estimation for composite indicators: the case of multidimensional poverty incidence

This paper proposes a methodology to obtain estimates in small domains when the target is a composite indicator. These indicators are of utmost importance for studying multidimensional phenomena, but little research has been done on how to obtain estimates of these indicators under the small area context. Composite indicators are particularly complex for this purpose since their construction requires different data sources, aggregation procedures, and weighting which makes challenging not only the estimation for small domains but also obtaining uncertainty measures. As case study of our proposal, we estimate the incidence of multidimensional poverty at the municipality level in Colombia. Furthermore, we provide uncertainty measures based on a parametric bootstrap algorithm.