Ridge Regression as a Technique for Analyzing Models with Multicollinearity

This paper,focuses on the issue of mz~lticollinearity in ,fami<v studies research. A
tcchrliq~re called ridge regression is presented as a method Jor arza<vzing models
contairzirzg multicollinearity. Multicollinearihi is described as an ofiierz overlooked,
but siguificant arzd pervasive problenz in the.fhnzil)l studies.field. The paper exumines
some problems associated with using ordinar?/ least squares solzltiorzs in
models containirzg multicollinearity. In addition, sonze usual techniques .fir dealing
with nzzilticollinearit~ are discussed along with some of their advantages and
disndvarztages. Finall)], the ridge regressiorz solzltiorz is demonstrated as an alterrzative
technique,for iderztifiirzg multicollinearity problems in a set of data and as a
mearzs,f-orp roducing reliable results irz the preserzce of a multicollirzear model. The
s t l i b uses simzllated data and a nzodel of nzarital satisfactiorz to denzonstrate the
ridge regression technique. The results suggest that a ridge regression solution can
produce results that are difyererzt,fi.om the ordinary least squares solution when the
predictors are not orthogorzal. Each of'the different solutions suggests a diff'erent
itzterpretation of' the data.