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Consider fitting the multiple regression model

Ey=β0+β1x1+β2x2+β3x3+β4x4+β5x5

A matrix of correlations for all pairs of independent variables is given below. Do you detect a multicollinearity problem? Explain.


Short Answer

Expert verified

In this question, x4 and x2 has a correlation of 0.93 and x4 and x5 has a correlation of 0.86. These correlation numbers are very high indicating a strong positive relationship between x4 and x2 and x4 and x5 respectively. Thus, the problem of multicollinearity exists in the model.

Step by step solution

01

Multicollinearity check

Multicollinearity is checked by checking the correlation amongst the independent variables. If there is high correlation amongst any two independent variables, it is said that the problem of multicollinearity exists in the model

02

Application of multicollinearity check

In this question, x4 and x2 has a correlation of 0.93 and x4 and x5 has a correlation of 0.86. These correlation numbers are very high indicating a strong positive relationship between x4 and x2 and x4 and x5 respectively. Thus, the problem of multicollinearity exists in the model.

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Most popular questions from this chapter

Suppose you have developed a regression model to explain the relationship between y and x1, x2, and x3. The ranges of the variables you observed were as follows: 10 ≤ y ≤ 100, 5 ≤ x1 ≤ 55, 0.5 ≤ x2 ≤ 1, and 1,000 ≤ x3 ≤ 2,000. Will the error of prediction be smaller when you use the least squares equation to predict y when x1 = 30, x2 = 0.6, and x3 = 1,300, or when x1 = 60, x2 = 0.4, and x3 = 900? Why?

Reality TV and cosmetic surgery. Refer to the Body Image: An International Journal of Research (March 2010) study of the impact of reality TV shows on a college student’s decision to undergo cosmetic surgery, Exercise 12.17 (p. 725). Recall that the data for the study (simulated based on statistics reported in the journal article) are saved in the file. Consider the interaction model, , where y = desire to have cosmetic surgery (25-point scale), = {1 if male, 0 if female}, and = impression of reality TV (7-point scale). The model was fit to the data and the resulting SPSS printout appears below.

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Question: Predicting elements in aluminum alloys. Aluminum scraps that are recycled into alloys are classified into three categories: soft-drink cans, pots and pans, and automobile crank chambers. A study of how these three materials affect the metal elements present in aluminum alloys was published in Advances in Applied Physics (Vol. 1, 2013). Data on 126 production runs at an aluminum plant were used to model the percentage (y) of various elements (e.g., silver, boron, iron) that make up the aluminum alloy. Three independent variables were used in the model: x1 = proportion of aluminum scraps from cans, x2 = proportion of aluminum scraps from pots/pans, and x3 = proportion of aluminum scraps from crank chambers. The first-order model, , was fit to the data for several elements. The estimates of the model parameters (p-values in parentheses) for silver and iron are shown in the accompanying table.

(A) Is the overall model statistically useful (at α = .05) for predicting the percentage of silver in the alloy? If so, give a practical interpretation of R2.

(b)Is the overall model statistically useful (at a = .05) for predicting the percentage of iron in the alloy? If so, give a practical interpretation of R2.

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(d)Based on the parameter estimates, sketch the relationship between percentage of iron (y) and proportion of aluminum scraps from cans (x1). Conduct a test to determine if this relationship is statistically significant at α = .05.

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