The formula to calculate the Variance Inflation Factor (VIF) is:
\[ VIF = \frac{1}{1 - R^2} \]
Where:
A variance inflation factor is defined as the quotient of the variance in a model with multiple terms by the variance in a model with one term alone.
Let's consider an example:
Using the formula to calculate the Variance Inflation Factor:
\[ VIF = \frac{1}{1 - 0.8} = 5 \]
This demonstrates that with an R² of 0.8, the variance inflation factor would be 5.
