Multicollinearity

[rgil321]

Hello,

I am working on a research/study and could use some help. My study is the affects on SAT scores for 2012. I am using the dependent variable: US SAT Scores for 2012.

I am using the Independent variables: US Median Household Income; US PSAT/MATH scores; US PSAT/Critical Reading scores; and USPSAT Writing scores. (For 51 states)

(Below are the results)

It appears that multicollinearity is occurring; So I want to combine two independent variables (writing and reading) and use STATE demographics as another IND variable. What do you believe I should do??

(Following is the regression I received)

Dependent Variable: SAT
Method: Least Squares
Date: 11/27/13 Time: 00:29
Sample: 1 51
Included observations: 51

Variable Coefficien Std. Error t-Statistic Prob.

C -886.4317 266.4041 -3.327395 0.0017
MEDIAN_HOUSEHOLD_INCOME -0.001445 0.001359 -1.063508 0.2931
PSAT_MATH 30.19391 14.79523 2.040787 0.0470
PSAT_READING 0.174249 27.58466 0.006317 0.9950
PSAT_WRITING_SKILLS 22.09775 19.12802 1.155256 0.2540

R-squared 0.700140 Mean dependent var 1585.020
Adjusted R-squared 0.674065 S.D. dependent var 125.9756
S.E. of regression 71.92041 Akaike info criterion 11.48189
Sum squared resid 237937.1 Schwarz criterion 11.67129
Log likelihood -287.7882 Hannan-Quinn criter. 11.55426
F-statistic 26.85119 Durbin-Watson stat 1.864842
Prob(F-statistic) 0.000000



Thank you for your time....I really need help111

[trubador]

http://forums.eviews.com/viewtopic.php?f=18&t=7903

[sohail]

follow steps given on this page to do test for multicollinearity. test is called VIF


http://wps.aw.com/wps/media/objects/222 ... pter08.pdf