Centering in Multiple Regression Does Not Always Reduce Multicollinearity: How to Tell When Your Estimates Will Not Benefit From Centering

Abstract

Within the context of moderated multiple regression, mean centering is recommended both to simplify the interpretation of the coefficients and to reduce the problem of multicollinearity. For almost 30 years, theoreticians and applied researchers have advocated for centering as an effective way to reduce the correlation between variables and thus produce more stable estimates of regression coefficients. By reviewing the theory on which this recommendation is based, this article presents three new findings. First, that the original assumption of expectation-independence among predictors on which this recommendation is based can be expanded to encompass many other joint distributions. Second, that for many jointly distributed random variables, even some that enjoy considerable symmetry, the correlation between the centered main effects and their respective interaction can increase when compared with the correlation of the uncentered effects. Third, that the higher order moments of the joint distribution play as much of a role as lower order moments such that the symmetry of lower dimensional marginals is a necessary but not sufficient condition for a decrease in correlation between centered main effects and their interaction. Theoretical and simulation results are presented to help conceptualize the issues.