Synthetic estimation methods for resource allocation formulae

<p>This note introduces the use of synthetic estimation as a means of establishing need levels and expenditure requirements of small areas, by means of worked illustrations zoith a simplified example. It explains a number of practical problems with the use of such indicators, in particular the reason for using linear rather than the theoretically preferable logistic and tobit regression. It compares the method of estimating need and unit cost separately, compared with a direct expenditure need approach.