Prediction of Rural Residents’ Consumption Expenditure Based on Lasso and Adaptive Lasso Methods

Abstract

When the variable of model is large, the Lasso method and the Adaptive Lasso method can effectively select variables. This paper prediction the rural residents’ consumption expenditure in China, based on respectively using the Lasso method and the Adaptive Lasso method. The results showed that both can effectively and accurately choose the appropriate variable, but the Adaptive Lasso method is better than the Lasso method in prediction accuracy and prediction error. It shows that in variable selection and parameter estimation, Adaptive Lasso method is better than the Lasso method.