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From |
David Hoaglin <dchoaglin@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: What is the effect of centering on marginal effects? |

Date |
Thu, 2 Aug 2012 14:12:20 -0400 |

Richard, Collinearity can cause problems in the numerical computation, but that is by no means the whole story. I was reacting to the statement that "centering variables will not reduce multicollinearity," which is simply incorrect. The condition indexes that David Belsley developed are closely related to the condition number that numerical analysts assign to a least-squares problem, derived from the singular-value decomposition of the matrix of data on the predictor variables. A near linear dependency (collinearity) can degrade the variances of the estimated coefficients of the predictors involved in the dependency. Belsley's coefficient variance decomposition is designed to reveal such problems. Near dependencies can arise when variables are not functionally related. The problems with monomials such as X, X^2, X^3, ..., are sometimes alleviated by using orthogonal polynomials. David Hoaglin On Wed, Aug 1, 2012 at 4:16 PM, Richard Williams <richardwilliams.ndu@gmail.com> wrote: > > I am not sure why that is much of a concern though. Sure, if one variable is > computed from another, there will tend to be collinearity, e.g. X will > usually be correlated with X^2; femaleXses will tend to be correlated with > female and ses. Further, centering continuous vars will tend to reduce > collinearity. But, so what? Unless the software is having trouble converging > to a solution, the collineairity doesn't really matter. Centering may make > the results easier to interpret, but collinearity in and of itself in these > situations usually doesn't create much grief. * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**References**:**Re: st: What is the effect of centering on marginal effects?***From:*Alessandro Freire <alessandro.freire@gmail.com>

**Re: st: What is the effect of centering on marginal effects?***From:*David Hoaglin <dchoaglin@gmail.com>

**Re: st: What is the effect of centering on marginal effects?***From:*Richard Williams <richardwilliams.ndu@gmail.com>

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