Factor variables
Stata handles factor (categorical) variables elegantly. You can
prefix a variable with i. to specify indicators for each level
(category) of the variable. You can put a # between two variables to
create an interaction–indicators for each combination of the categories
of the variables. You can put ## instead to specify a full factorial
of the variables—main effects for each variable and an interaction. If
you want to interact a continuous variable with a factor variable, just
prefix the continuous variable with c.. You can specify up to
eight-way interactions.
We run a linear regression of cholesterol level on a full factorial of age
group and whether the person smokes along with a continuous body mass index
(bmi) and its interaction with whether the person smokes.
We could have used parenthesis binding, to type the same model more briefly:
. regress cholesterol smoker##(agegrp c.bmi)
Base levels can be changed on the fly: i.agegrp uses the default base
level of 1, whereas b3.agegrp makes 3 the base level.
The level indicator variables are not created in your dataset, saving lots of space.
Factor variables are integrated deeply into Stata’s processing of variable
lists, providing a consistent way of interacting with both estimation and
postestimation commands.
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