Variance estimation for a low income proportion

Proportions below a given fraction of a quantile of an income distribution are often estimated from survey data in comparisons of poverty. We consider the estimation of the variance of such a proportion, estimated from Family Expenditure Survey data. We show how a linearization method of variance estimation may be applied to this proportion, allowing for the effects of both a complex sampling design and weighting by a raking method to population controls. We show that, for data for 1998-1999, the estimated variances are always increased when allowance is made for the design and raking weights, the principal effect arising from the design. We also study the properties of a simplified variance estimator and discuss extensions to a wider class of poverty measures. Copyright 2003 Royal Statistical Society.