# Multicollinearity (WEDC)

**What is it?**

- Two or more independent variables are correlated.

**Effect?**

- Coefficients are consistent (but unreliable).
- Standard errors are overestimated.
- Too many Type II errors

**Detection?**

- Conflicting t and F statistics; correlations among independent variables if K=2

**Correction?**

- Drop one of the correlated variables

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