Statistics How To

Condition Index: Simple Definition, Interpretation

Statistics Definitions >

A condition index (sometimes called a condition number) shows the degree of multicolinearity in a regression design matrix. It is an alternative to other methods like variance inflation factors.

condition index

IBM SPSS table with condition indices. Source: IBM Knowledge Center.


Although there’s no generally agreed on method to identifying multicollinearity in data, condition indices give a relatively straightforward way to find potential issues. The indices are widely available in statistical software. For example, SPSS gives a condition index as part of the SPSS Collinearity Diagnostics table found in output.

Kennedy (2003) describes a condition index is the largest to smallest characteristic root of X’X; it’s a measure of how close X’X is the perfect multicollinearity (called singularity). The indices are calculated as “…the square roots of the ratios of the largest eigenvalue to each successive eigenvalue” (IBM Knowledge Center).

Condition Index Interpretation

Kennedy gives the following rule of thumb for interpreting a condition index; Any index greater than 30 “…indicates strong collinearity.” The IBM knowledge center calles values over 30 a “serious problem” and also suggests values greater than 15 may indicate a problem that warrants a closer look.

References

IBM Knowledge Center. Collinearity diagnostics. Retrieved July 23, 2019 from: https://www.ibm.com/support/knowledgecenter/en/SSLVMB_23.0.0/spss/tutorials/reg_cars_collin_01.html
Kennedy, P. (2003). A Guide to Econometrics. MIT Press.

------------------------------------------------------------------------------

Need help with a homework or test question? With Chegg Study, you can get step-by-step solutions to your questions from an expert in the field. Your first 30 minutes with a Chegg tutor is free!

Statistical concepts explained visually - Includes many concepts such as sample size, hypothesis tests, or logistic regression, explained by Stephanie Glen, founder of StatisticsHowTo.

Comments? Need to post a correction? Please post a comment on our Facebook page.

Check out our updated Privacy policy and Cookie Policy

Leave a Reply