In: Economics
Use the dataset RuralLand.xls to test for Multicollinearity. Price is observed land price per acre excluding improvements; WL is the proportion of acreage that is wooded; DA is the distance from parcel to Sarasota airport; D75 is the distance form parcel to I-75; A is acreage of parcel; and MO is month in which the parcel was sold. Price is assumed to be dependent on these other factors.
Please provide a thorough walk through on analysis and any testing done as opposed to just posting the answers.
N | Price | WL | DA | D75 | A | MO |
1 | 5556.0 | 1.0 | 12.1 | 4.9 | 36.0 | 33.0 |
2 | 5236.0 | 1.0 | 12.1 | 4.9 | 38.2 | 30.0 |
3 | 5952.0 | 1.0 | 12.0 | 4.9 | 21.0 | 15.0 |
4 | 7000.0 | 0.0 | 16.0 | 1.2 | 40.0 | 44.0 |
5 | 3750.0 | 0.0 | 15.5 | 3.2 | 40.0 | 43.0 |
6 | 7000.0 | 0.0 | 13.7 | 3.2 | 20.0 | 25.0 |
7 | 5952.0 | 0.0 | 14.5 | 2.5 | 21.0 | 24.0 |
8 | 2009.0 | 0.0 | 16.1 | 0.1 | 656.0 | 19.0 |
9 | 2583.0 | 1.0 | 15.2 | 3.0 | 60.0 | 18.0 |
10 | 2449.0 | 0.0 | 15.5 | 1.0 | 156.0 | 18.0 |
11 | 2500.0 | 0.5 | 15.2 | 2.0 | 40.0 | 3.0 |
12 | 3000.0 | 0.0 | 15.5 | 3.2 | 13.0 | 3.0 |
13 | 3704.0 | 0.0 | 13.5 | 2.5 | 27.0 | 3.0 |
14 | 3500.0 | 0.0 | 15.5 | 1.0 | 10.0 | 3.0 |
15 | 3500.0 | 0.0 | 17.5 | 5.4 | 20.0 | 38.0 |
16 | 4537.0 | 1.0 | 18.0 | 5.9 | 38.0 | 24.0 |
17 | 3700.0 | 0.0 | 17.2 | 5.1 | 5.0 | 3.0 |
18 | 2020.0 | 1.0 | 34.2 | 22.0 | 5.0 | 27.0 |
19 | 5000.0 | 0.0 | 11.1 | 5.1 | 3.5 | 13.0 |
20 | 4764.0 | 0.0 | 14.2 | 2.0 | 237.6 | 40.0 |
21 | 871.0 | 1.0 | 14.2 | 2.0 | 237.6 | 7.0 |
22 | 3500.0 | 1.0 | 11.1 | 3.1 | 20.0 | 41.0 |
23 | 15200.0 | 1.0 | 14.7 | 2.4 | 5.0 | 36.0 |
24 | 4767.0 | 0.0 | 12.1 | 4.1 | 30.0 | 22.0 |
25 | 16316.0 | 1.0 | 14.8 | 2.5 | 3.8 | 21.0 |
Given the dataset, the following R-script can be used to run the regression and derive VIF using the R-package 'car' as shown below.
The results can be found below. As observed, all the VIF are less than 5. Hence, in this particular case, collinearity is not serious.