Multicollinearity is not a serious problem if the purpose of the study is to predict or forecast future values of the dependent variable.

Question

Quizplus · Accepted Answer

Multicollinearity is a problem when it comes to interpreting the individual effects of the independent variables on the dependent variable. However, if the focus of the study is on predicting or forecasting future values of the dependent variable, then multicollinearity may not be as much of a concern as the model's ability to accurately predict future outcomes is what matters most.

Multicollinearity Is Not a Serious Problem If the Purpose of the Study