OUTLIER IDENTIFICATION ON PENALIZED SPLINE REGRESSION MODELING FOR POVERTY GAP INDEX IN JAVA

Abstract

Java is one of the islands in Indonesia which has good establishment acceleration. Even though economic growth was good, poverty is still a serious problem. Three of six provinces, including DI Yogyakarta, Central Java, and East Java still have poverty rates above national rates in March 2020. This problem indicates that an imbalance in poverty happens between those regions. Several regions have extreme conditions or known as outliers. Besides that, poverty gap data have a complex pattern so modeling using a non-parametric approach is suitable. This study aims to build an appropriate model to support the success of poverty alleviation in Java and the identification of outliers was carried out using an adjusted boxplot. The best-penalized regression spline model for Poverty Gap Index in Java Island was obtained by Generalized minimum Cross-Validation (GCV) using optimum smoothing parameter (λ) 0,12 and knot combination (1, 2, 4, 1, 5, 3, and 1) for seven predictor variables. The result shows that penalized spline regression model has a higher R2 than OLS regression. The R2 is obtained 69,10%, so the model is feasible to explain the variability of the poverty gap in Java. Moreover, based on the outliers’ identification shows a dependency between outlier in data and residual because some districts/cities are identified as outliers in both.