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

[Kit Baum <baum@bc.edu>]

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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