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Explain Collinearity Between Continuous And Categorical Variables. Is Vif A Correct Method To Compute Collinearity In This Case? |
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Answer» COLLINEARITY between categorical and continuous VARIABLES is very common. The choice of reference category for DUMMY variables affects multicollinearity. It means CHANGING the reference category of dummy variables can avoid collinearity. Pick a reference category with highest proportion of CASES. VIF is not a correct method in this case. VIFs should only be run for continuous variables. The t-test method can be used to check collinearity between continuous and dummy variable. Collinearity between categorical and continuous variables is very common. The choice of reference category for dummy variables affects multicollinearity. It means changing the reference category of dummy variables can avoid collinearity. Pick a reference category with highest proportion of cases. VIF is not a correct method in this case. VIFs should only be run for continuous variables. The t-test method can be used to check collinearity between continuous and dummy variable. |
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