Dummy-Variable Regression - SAGE Publications Inc

7 dummy -VariableRegressionOne of the serious limitations of multiple- Regression analysis, as presented in Chapters 5and 6, is that it accommodates only quantitative response and explanatory variables. In thischapter and the next, I will explain how qualitative explanatory variables, calledfactors, can beincorporated into a linear current chapter begins with an explanation of how adummy- variable regressorcan becoded to represent adichotomous( , two-category) factor. I proceed to show how a set of dummyregressors can be employed to represent apolytomous(many-category) factor. I next describehow interactions between quantitative and qualitative explanatory variables can be represented indummy- Regression models and how to summarize models that incorporate interactions. Finally,I explain why it does not make sense to standardize Dummy-Variable and interaction A Dichotomous FactorLet us consider the simplest case: one dichotomous factor and one quantitative explanatoryvariable.

7 Dummy-Variable Regression O ne of the serious limitations of multiple-regression analysis, as presented in Chapters 5 and 6, is that it accommodates only quantitative response and explanatory variables. In this chapter and the next, I will explain how qualitative explanatory variables, called factors, can be incorporated into a linear model.1

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