This video discusses what are dummy variables, how do we construct them, and how do we interpret their coefficients in a multiple or multivariate linear regression.
TABLE OF CONTENTS:
00:00 Introduction
00:10 Continuous vs. Categorical Variables
01:48 The Problem with Categorical Variables
02:52 Dummy Variables: Representing Categories
03:48 Data for Example: Professors’ Salaries
05:27 Exploring the Data
08:48 Representing Two Categories: Qualification
09:39 Data Table with Professional Dummy
10:02 Regressing Salary on Qualification
11:50 Comparing Salaries by Qualification
13:02 Qualification Regression Result
13:44 Interpreting the Coefficients for Qualification
14:45 More than Two Categories: Rank
15:43 Regressing Salary on Ranks
17:52 Data Table with Rank Dummies
18:19 Rank Regression Result
18:48 Interpreting the Coefficients for Qualification
21:14 Rank Regression Result (excluding assistant)
22:45 How do we interpret these?