What are the Consequences of Ignoring Multicollinearity?
Ignoring multicollinearity can have several adverse effects. It can lead to:
Inaccurate Estimates: The estimated coefficients of the correlated variables can become unreliable, making it difficult to gauge their actual impact. Overconfidence in Decisions: Leaders might become overly confident in their decision-making based on flawed data interpretations. Resource Misallocation: Resources might be allocated based on incorrect assumptions, leading to inefficiencies.