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Economics 310

Economics 310 . Lecture 10 Dummy Variables. Dummy Variables. Zero-one variables Bernoulli Variables Qualitative variables Used to handle yes-no, possess-don’t possess try situations. Dummy Variable as only Explanatory Variable. Dummy Variable as only Explanatory Variable. Y.  1.

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Economics 310

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  1. Economics 310 Lecture 10 Dummy Variables

  2. Dummy Variables • Zero-one variables • Bernoulli Variables • Qualitative variables • Used to handle yes-no, possess-don’t possess try situations

  3. Dummy Variable as only Explanatory Variable

  4. Dummy Variable as only Explanatory Variable Y 1 1+2 D=0 D=1

  5. Dummy as intercept shifter

  6. Y X Dummy as intercept shifter

  7. Qualitative variable with more than 2 classes

  8. Qualitative variable with more than 2 classes Y X

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