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Ratio Variables in Aggregate Data Analysis

Author

Listed:
  • Kenneth A. Bollen

    (Brown University)

  • Sally Ward

    (Rutgers University)

Abstract

This article discusses three different uses of ratio variables in aggregate data analysis: (1) as measures of theoretical concepts, (2) as a means to control an extraneous factor, and (3) as a correction for heteroscedasticity. In the use of ratios as indices of concepts, a problem can arise if it is regressed on other indices or variables that contain a common component. For example, the relationship between two per capita measures may be confounded with the common population component in each variable. Regarding the second use of ratios, only under exceptional conditions will ratio variables be a suitable means of controlling an extraneous factor. Finally, the use of ratios to correct for heteroscedasticity is also often misused. Only under special conditions will the common form ofregres sion with ratio variables correct for heteroscedasticity. Alternatives to ratios for each of these cases are discussed and evaluated.

Suggested Citation

  • Kenneth A. Bollen & Sally Ward, 1979. "Ratio Variables in Aggregate Data Analysis," Sociological Methods & Research, , vol. 7(4), pages 431-450, May.
    • Handle: RePEc:sae:somere:v:7:y:1979:i:4:p:431-450
    DOI: 10.1177/004912417900700405
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    References listed on IDEAS

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    1. Belsley, David A, 1972. "Specification With Deflated Variables and Specious Spurious Correlation," Econometrica, Econometric Society, vol. 40(5), pages 923-927, September.
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