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Chapter 7, Dummy Variable - Miami University
3. Sample mean is the estimate for population mean, so we have the following interpre-tation for the estimated coefficients in (2) ˆ 0 = ¯yD=0 (8) ˆ 1 = ¯yD=1 ¯yD=0 (9) where ¯yD=0 denotes the average Y in the sub-sample for which D = 0; y¯D=1 denotes the average Y in the sub-sample for which D = 1: Equation (2) provides a simple way to carry out a comparison of means test (or …
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