IDEAS home Printed from https://ideas.repec.org/a/ags/nareaj/159045.html
   My bibliography  Save this article

Multicollinearity: Effects, Symptoms, And Remedies

Author

Listed:
  • Willis, Cleve E.
  • Perlack, Robert D.

Abstract

Multicollinearity is one of several problems confronting researchers using regression analysis. This paper examines the regression model when the assumption of independence among Ute independent variables is violated. The basic properties of the least squares approach are examined, the concept of multicollinearity and its consequences on the least squares estimators are explained. The detection of multicollinearity and alternatives for handling the problem are then discussed. The alternative approaches evaluated are variable deletion, restrictions on the parameters, ridge regression and Bayesian estimation.

Suggested Citation

  • Willis, Cleve E. & Perlack, Robert D., 1978. "Multicollinearity: Effects, Symptoms, And Remedies," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 7(1), pages 1-7, April.
    • Handle: RePEc:ags:nareaj:159045
    DOI: 10.22004/ag.econ.159045
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/159045/files/Multicollinerarity.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.159045?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. S. Roy Chowdhury & Vishnuprasad Nagadevara & Earl O. Heady, 1975. "A Bayesian Application on Cobb-Douglas Production Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(2), pages 361-363.
    2. Ron C. Mittelhammer & John L. Baritelle, 1977. "On Two Strategies for Choosing Principal Components in Regression Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(2), pages 336-343.
    3. T. Dudley Wallace, 1977. "Pretest Estimation in Regression: A Survey," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(3), pages 431-443.
    4. McCallum, B T, 1970. "Artificial Orthogonalization in Regression Analysis," The Review of Economics and Statistics, MIT Press, vol. 52(1), pages 110-113, February.
    5. White, Kenneth J, 1978. "A General Computer Program for Econometric Methods-Shazam," Econometrica, Econometric Society, vol. 46(1), pages 239-240, January.
    6. William G. Brown & Bruce R. Beattie, 1975. "Improving Estimates of Economic Parameters by Use of Ridge Regression with Production Function Applications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(1), pages 21-32.
    7. John P. Doll, 1974. "On Exact Multicollinearity and the Estimation of the Cobb-Douglas Production Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 556-563.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yanagida, John F. & Conway, Roger K., 1979. "An Examination Of Demand Functions For Beef, Pork, And Broilers," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-14, October.
    2. Habib-ur Rahman & Muhammad Waqas Yousaf & Nageena Tabassum, 2020. "Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach," IJFS, MDPI, vol. 8(3), pages 1-19, July.
    3. Morzuch, Bernard J., 1980. "Principal Components And The Problem Of Multicollinearity," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-3, April.
    4. Sasmita Mishra & Jitendra Kumar Mohanty, 2016. "The Predictors of Employee Engagement: A Study in a Ferro Alloys Company of India," Global Business Review, International Management Institute, vol. 17(6), pages 1441-1453, December.
    5. Cai, Zhen & Xie, Yi & Aguilar, Francisco X., 2017. "Eco-label credibility and retailer effects on green product purchasing intentions," Forest Policy and Economics, Elsevier, vol. 80(C), pages 200-208.
    6. Ignacio Escañuela Romana & Mercedes Torres-Jiménez & Mariano Carbonero-Ruz, 2023. "Price Elasticity of Demand for Domestic Air Travel in the United States: A Robust Quasi-Experimental Estimation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 51(2), pages 149-167, September.
    7. Morzuch, Bernard J., 1980. "Principal Components And The Problem Of Multicollinearity," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(1), pages 1-3, April.
    8. Yanagida, John F. & Conway, Roger K., 1979. "An Examination Of Demand Functions For Beef, Pork, And Broilers," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 8(2), pages 1-14, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Willis, Cleve E. & Perlack, Robert D., 1978. "Multicollinearity: Effects, Symptoms, And Remedies," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-7, April.
    2. Morzuch, Bernard J., 1980. "Principal Components And The Problem Of Multicollinearity," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-3, April.
    3. Morzuch, Bernard J., 1980. "Principal Components And The Problem Of Multicollinearity," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(1), pages 1-3, April.
    4. Kevin J. Fox & Ulrich Kohli & Alice Shiu, 2010. "Trade Agreements and Trade Opportunities: A Flexible Approach for Modeling Australian Export and Import Elasticities," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 513-530, August.
    5. Mittlehammer, Ron C., 1983. "Mixed Estimation: A New Perspective," 1983 Annual Meeting, July 31-August 3, West Lafayette, Indiana 279112, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Sadorsky, P. A., 1989. "Measuring Resource Scarcity in Non-renewable Resources with Inequality Constrained Estimation," Queen's Institute for Economic Research Discussion Papers 275216, Queen's University - Department of Economics.
    7. Gustafson, Cole R., 1986. "Measuring The Productivity Of Capital In United States Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 18(2), pages 1-9, December.
    8. Parcell, Joe L. & Kastens, Terry L. & Dhuyvetter, Kevin C. & Schroeder, Ted C., 2000. "Agricultural Economists' Effectiveness in Reporting and Conveying Research Procedures and Results," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(2), pages 173-182, October.
    9. Pan, Shihua, 1990. "The microfoundations of mixed system of planning and markets: some theoretical considerations and an empirical analysis of the Chinese agriculture," ISU General Staff Papers 1990010108000010876, Iowa State University, Department of Economics.
    10. Marconi, Gabriele, 2014. "European higher education policies and the problem of estimating a complex model with a small cross-section," MPRA Paper 87600, University Library of Munich, Germany.
    11. L W Hepple, 1998. "Exact Testing for Spatial Autocorrelation among Regression Residuals," Environment and Planning A, , vol. 30(1), pages 85-108, January.
    12. Adrian C. Darnell, 1994. "A Dictionary Of Econometrics," Books, Edward Elgar Publishing, number 118.
    13. Wan Fung Lee & Jeffrey W. Bulcock & Wo Shun Luk, 1984. "The R2 Ridge Trace in 2SLS Regression Estimation," Sociological Methods & Research, , vol. 13(2), pages 219-249, November.
    14. Antle, John M. & Aitah, Ali S., 1982. "The Structure of Rice Technology, Farmer Rationality, and Agricultural Policy in Egypt," Working Papers 233042, University of California, Davis, Agricultural Development Systems: Egypt Project.
    15. repec:ags:ucdegw:233042 is not listed on IDEAS
    16. Bradford, G. L. & Debertin, D. L., 1985. "Establishing Linkages Between Economic Theory and Enterprise Budgeting for Teaching and Extension Programs," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(2), pages 221-230, December.
    17. McDonald, John & Snooks, G. D., 1986. "Domesday Economy: A New Approach to Anglo-Norman History," OUP Catalogue, Oxford University Press, number 9780198285243.
    18. Fishelson, Gideon, 1981. "The Price of Oil and Economic Activity, A Short-Run Model," Foerder Institute for Economic Research Working Papers 275334, Tel-Aviv University > Foerder Institute for Economic Research.
    19. Moralles, Herick Fernando & do Nascimento Rebelatto, Daisy Aparecida, 2016. "The effects and time lags of R&D spillovers in Brazil," Technology in Society, Elsevier, vol. 47(C), pages 148-155.
    20. V. Kerry Smith, 1980. "Some Comments on the Evaluation of Informal Models," NBER Chapters, in: Evaluation of Econometric Models, pages 123-131, National Bureau of Economic Research, Inc.
    21. Richard J. Stoll, 1984. "The Guns of November," Journal of Conflict Resolution, Peace Science Society (International), vol. 28(2), pages 231-246, June.

    More about this item

    Keywords

    Research Methods/ Statistical Methods;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:nareaj:159045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/nareaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.