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Mean centering helps alleviate "micro" but not "macro" multicollinearity
Dawn Iacobucci1, Matthew J Schneider2, Deidre L Popovich3
1Vanderbilt University, 401 21st Avenue South, Nashville, TN, 37203, USA. Dawn.Iacobucci@owen.vanderbilt.edu.
Behavior Research Methods
|July 8, 2015
Summary
Mean centering variables before calculating interaction terms in multiple regression is clarified. This practice can be useful, but its effect on multicollinearity depends on the definition used.
Area of Science:
- Statistics
- Social Sciences Methodology
Background:
- Researchers debate the utility of mean centering variables for interaction terms in multiple regression.
- Current understanding is often based on convention rather than clear principles, leading to confusion.
Purpose of the Study:
- To clarify the role and impact of mean centering variables in multiple regression analysis.
- To reconcile conflicting perspectives on whether mean centering reduces multicollinearity.
Main Methods:
- Theoretical clarification using mathematical proofs.
- Empirical analysis with an illustrative dataset.
- Quantitative assessment via Monte Carlo simulation.
Main Results:
- Mean centering impacts multicollinearity differently depending on whether "micro" or "macro" definitions are applied.
- The practice has precise, demonstrable effects on individual correlation coefficients and overall model indices.
Conclusions:
- Mean centering can be a beneficial practice when applied appropriately in multiple regression.
- Understanding the distinction between different definitions of multicollinearity is key to its effective use.
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