Detection of influential observations in principle component regression

Abstract

Multicollinearity that may exist among explanatory variables in a regression model can make the regression coefficients insignificant and difficult to interpret. Principal component regression (PCR) is an effective way for solving multicollinearity in regression analysis. The existence of multicollinearity mayor may not be induced by the presence of influential observations. This paper discusses some diagnostic methods for identifying influential observations in the PCR. A data set on water quality of New York Rivers was considered to illustrate the methods.