Applied Regression and Modeling

CHAPTER 7

Models with Qualitative Independent (Dummy) Variables, Interaction Models, All Subset and Stepwise Regression Models with Computer Analysis

Dummy or Indicator Variables in Multiple Regression

In regression, we often encounter qualitative or indicator variables that need to be included as one of the independent variables in the model. For example, if we are interested in building a regression model to predict the salary of male and female employees based on their education and years of experience, the variable male or female is a qualitative variable that must be included as a separate independent variable in the model. To include such qualitative variables in the model we use a dummy or indicator variable. The use of dummy or indicator ...