Journal article
The VIF Score. What is it Good For? Absolutely Nothing
Organizational research methods, Vol.28(1), pp.58-75
01/2025
DOI: 10.1177/10944281231216381
Abstract
Variance inflation factors (VIF scores) are regression diagnostics commonly invoked throughout the social sciences. Researchers typically take the perspective that VIF scores below a numerical rule-of-thumb threshold act as a “silver bullet” to dismiss any and all multicollinearity concerns. Yet, no valid logical basis exists for using VIF thresholds to reject the possibility of multicollinearity-induced type 1 errors. Reporting VIF scores below a threshold does not in any way add to the credibility of statistically significant results among correlated variables. In contrast to this “threshold perspective,” our analysis expands the scope of a perspective that has considered multicollinearity and misspecification. We demonstrate analytically that a regression omitting a relevant variable correlated with included variables that exhibit multicollinearity is susceptible to endogeneity-induced bias inflation and beta polarization, leading to the possible co-existence of type 1 errors and low VIF scores. Further, omitting variables explicitly reduces VIF scores. We conclude that the threshold perspective not only lacks any logical basis but also is fundamentally misleading as a rule-of-thumb. Instrumental variables represent one clear remedy for endogeneity-induced bias inflation. If exogenous instruments are unavailable, we encourage researchers to test only straightforward, unambiguous theory when using variables that exhibit multicollinearity, and to ensure that correlated co-variates exhibit the expected signs.
Details
- Title: Subtitle
- The VIF Score. What is it Good For? Absolutely Nothing
- Creators
- Arturs Kalnins - University of IowaKendall Praitis Hill - Swarthmore College
- Resource Type
- Journal article
- Publication Details
- Organizational research methods, Vol.28(1), pp.58-75
- DOI
- 10.1177/10944281231216381
- ISSN
- 1094-4281
- eISSN
- 1552-7425
- Language
- English
- Electronic publication date
- 12/13/2023
- Date published
- 01/2025
- Academic Unit
- Management and Entrepreneurship ; Economics
- Record Identifier
- 9984542058702771
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