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st: re: mean-centering predictor variables in probit regression


From   Kit Baum <baum@bc.edu>
To   statalist@hsphsun2.harvard.edu
Subject   st: re: mean-centering predictor variables in probit regression
Date   Fri, 7 Dec 2007 13:47:23 -0500

Kam Kup said

Is it accepted to standardize covariates in a discrete
choice model in order to avoid multicollinearity.
(Standardizing here refers to mean-centering each
variable and then divide it by its standard
deviation).


(multi)collinearity is a matter of linear association among the predictors. z-transforming data does not change intercorrelations among those variables; it merely causes them to have mean zero and variance one. The correlation matrix of the predictors will be unchanged, no matter what model you estimate using that predictor matrix.

Kit

Kit Baum, Boston College Economics and DIW Berlin
http://ideas.repec.org/e/pba1.html
An Introduction to Modern Econometrics Using Stata:
http://www.stata-press.com/books/imeus.html


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