## **Step-by-Step Solution**
### **1. Understanding VIF Formula**
The Variance Inflation Factor is:
\[
\text{VIF} = \frac{\text{Actual variance of coefficient}}{\text{Variance with no multicollinearity}}
\]
Given: **VIF = 1.8**
### **2. Interpret the VIF Value**
\[
1.8 = \frac{\text{Actual variance}}{\text{Variance with no multicollinearity}}
\]
This means the actual variance is **1.8 times** what it would be with no multicollinearity.
### **3. Calculate Percentage Increase**
If variance with no multicollinearity = 1 (base), then:
- Actual variance = 1.8
- **Increase** = 1.8 - 1 = 0.8
- **Percentage increase** = \( \frac{0.8}{1} \times 100\% = 80\% \)
---
## **Final Answer**
\[
\boxed{80}
\]
The variance of the coefficient is **80% greater** than what it would be if there was no multicollinearity.
---
### **Verification**
- VIF = 1.0 → 0% increase (no multicollinearity)
- VIF = 2.0 → 100% increase (variance doubles)
- VIF = 1.8 → 80% increase ✓
This makes intuitive sense: moderate multicollinearity (VIF = 1.8) inflates the variance by 80% compared to the ideal case.