STATA 4 Multicollinearity-1

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Indiana University, Bloomington *

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MISC

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Economics

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Feb 20, 2024

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docx

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3

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STATA Handout #4 Multicollinearity NOTE: Please submit your STATA handout via Canvas. Also, please print a copy and bring to class on the due date as we will be using this STATA output in our class discussion. NOTE: Please read the data dictionary before doing the analysis. It is very important that you are familiar with the variables in the data set to fully understand the analysis. You want to use the EXCEL data file indiana2016 . MULTICOLLINEARITY This Stata assignment involves learning how to determine whether your estimated OLS model suffers from multicollinearity. The data file indiana2016 will be used for this assignment. Example #1: Estimate Model Use the OLS to estimate the following model: y= inctotal and x’s= age gender educ marst hrswork healthins Commands/Code: drop if inctotal<1000 regress inctotal age gender educ marst hrswork healthins 1
Example #2: Correlation Coefficients Find the correlation coefficients for the variables used in the model Commands/Code: correlate inctotal age gender educ marst hrswork healthins Example #3: Calculate Variance Inflation Factors (VIFs) Estimate models to find R 2 ’s to calculate VIFs. Commands/Code: regress age gender educ marst hrswork healthins regress educ age gender marst hrswork healthins 2
regress hrswork age gender educ marst healthins Calculate the VIFs for age, educ, and hrswork 3
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