Statistics for Business: Decision Making and Analysis, 3rd Edition

... two explanatory variables in a regression model is known as an interaction. For male managers, the interaction is the same as Years. For female managers, the interaction Group × Years is 0. Table 25.4 shows four examples from the data table.

interaction

The product of two explanatory variables in a regression model.

What Do You Think?

1. Consider the context of the previous “What Do You Think” that concerns the effects of couponing supermarket customers.

   1. How would you define a dummy variable called Coupon to represent those who use store coupons at checkout?⁵

      ⁵ For customers who have a coupon, code Coupon = 1. Code the others 0.

   2. What does the average of the dummy variable Coupon tell you?⁶

      ⁶ The proportion of the sample who use coupons (see Chapter