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Participation and Democracy: Dynamics, Causes ... - Jacobs University

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well-known phenomenon in regression analysis, <strong>and</strong> it also poses a serious challenge<br />

when applying multi-level models. In short, it refers to a considerable correlation among<br />

the independent variables, which leads most likely to an unreliable estimation of effects.<br />

In a multilevel analysis, multicollinearity can occur among predictors of the same level,<br />

or between an interaction effect <strong>and</strong> a level-1 <strong>and</strong>/or level-2 predictor. Looking at the<br />

variables in the Models 1 <strong>and</strong> 2, collinearity among variables seems to be unavoidable: a<br />

central finding in participation research, for example, is the correlation between<br />

education <strong>and</strong> political interest. At the aggregate level, Seymour Martin Lipset’s central<br />

claim of modernization theory – “The more well-to-do a nation, the greater the chances<br />

that it will sustain democracy.” (Lipset 1959: 75) – suggests a strong correlation between<br />

the World Bank’s governance indicators <strong>and</strong> a country’s economic development. Table 8-<br />

4 documents the correlation coefficients among the level-2 predictors, suggesting a<br />

multicollinearity problem also at the aggregate level. Correlations are most pronounced<br />

between the level-2 variables <strong>and</strong> economic development (GDP per capita) as well as the<br />

democracy measures:<br />

Table 8-4:<br />

Correlation Effects Among Level-2 Variables<br />

V & A<br />

Dem.<br />

Stock<br />

GDP per<br />

capita<br />

Happiness<br />

Parliamenta.<br />

Proportional<br />

Inequality<br />

Tertiarization<br />

Voice <strong>and</strong><br />

Accountability -- .71 *** .59 *** .55 *** .27 * .81 *** -.41 *** .56 ***<br />

<strong>Democracy</strong><br />

Stock .71 *** -- .72 *** .52 *** .01 .78 *** -.12 .69 ***<br />

Happiness Level .59 *** .72 *** -- .31 ** .17 .63 *** .10 .61 ***<br />

Regime Type:<br />

Parliamentarism .55 *** .52 *** .31 ** -- .00 .55 *** -.46 *** .11<br />

Proportional<br />

System .27 * .01 .17 .00 -- .17 .26 * .09<br />

GDP per capita .81 *** .78 *** .63 *** .55 *** .17 -- -.39 *** .61 ***<br />

Inequality<br />

(Gini coefficient) -.41 *** -.12 *** .10 -.46 *** -.26 * -.39 *** -- .07<br />

Tertiarization .56 *** .69 *** .61 *** .14 .09 .61 *** .07 --<br />

N=78. Data entries are Pearson’s r.<br />

The problem of multicollinearity in the multilevel model becomes evident when<br />

introducing the level-2 predictors to the multilevel model: When each factor is entered<br />

157

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