We propose a new small area estimation approach that combines small area random effects with a smooth, nonparametrically specified trend. By using penalized splines as the representation for the nonparametric trend, it is possible to express the small area estimation problem as a mixed effect...

Estimation of finite population totals in the presence of auxiliary information is considered. A class of estimators based on penalized spline regression is proposed. These estimators are weighted linear combinations of sample observations, with weights calibrated to known control totals....