Restricted Maximum Likelihood Method As An Alternative Parameter Estimation in Heteroscedastic Regression

Abstract

Students are part of the community who have an income. The income of student is pocket money, scholarships, part-time jobs and so forth. They are trying to become trendsetter for their dress style. The consumption patterns are very influential in the behavior of saving. If the savings increases, not only the public funds will increase but also the investment. If the investment increases, the economic growth will also increase. The purpose of this research is to estimate multiple regression parameters using REML methods in modeling the student's saving in Faculty of Mathematics and Natural Science, Brawijaya University. The variables used were: the student's age, the amount of income of student's parent, the amount of student's pocket money, the amount of student's additional income, the amount of student's consumption and the amount of student's saving. REML method can overcome heteroscedasticity of error variance and provide unbiased estimator. The model of student's saving using REML method is as follows:̂= −1609 + 112 1 + 0.0088 2 + 0.0504 3 + 0.4706 4 − 0.636 5 Student's saving is affected significantly by: student's age ( 1 ), the amount of student's additional income ( 4 ), and the amount of student's consumption ( 5 ).