6. Qualitative Information in Regression Models Flashcards
1
Q
Binary variable
A
A variable used when the qualitative information can be in one of two categories.
2
Q
What is another name for binary variables
A
Dummy variables
Indicator varaibles
3
Q
Another word for base group?
A
Benchmark group
Basis for comparison
4
Q
What is the base group?
A
The omitted category which we compare our other variables to
5
Q
How can we combine dummy variables?
A
We can make interaction terms such as MarMale where
MarMale=1 if the individual is male and married
And
MarMale=0 otherwise
6
Q
When do we use interaction terms with dummy variables?
A
When we want to investigate the difference in slopes between categories
7
Q
What is a chow test
A
When we use an F test to determine if the regression function is the same for two different categories
