Multicollinearity
Definition
reparameterize, not cure.
Exact multicollinearity.
Example: y = job searching in 2002, x1 = income in 2001, x2=income in 2002.
y = b1*x1 + b2*x2
y = c1*(x1+x2) + c2*(x2-x1)
b1 = c1-c2, b2 = c1+c2
c1 = b1+b2, c2 = b2-b1
Left-Out Variables
Definition
Proof
Irrelevant Variables
Definition
Effects
Diagnosis
Treatment
Multicollinearity
Definition
Effects
Diagnosis
Treatment