Abstract:
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In statistical modeling, it is crucial to have consistent covariates that are most relevant to the variable of interest in the model. With the increasing richness of data from multiple sources, the size of the pool of potential variables is escalating. Some variables, however, could provide redundant information, add noise to the estimation, or waste the degree of freedom in the model. Therefore, variable selection is needed as a parsimonious process that aims to identify a minimal set of predictors for maximum predictive power. This study illustrates the variable selection methods considered and used in the small area estimation (SAE) modeling of measures related to the proficiency of adult competency, constructed using survey data collected in the first cycle of PIAAC. The developed variable selection process consists of two phases: Phase 1 identifies a small set of variables that are consistently highly correlated with the outcomes through methods such as correlation matrix, and multivariate LASSO analysis; Phase 2 utilizes a k-fold cross-validation process to select a stable final set of variables to be used in the final SAE models.
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