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Re: st: about dummy variables


From   Daniel Lawson <k95dl01@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: about dummy variables
Date   Thu, 17 Mar 2005 11:20:37 -0500

This doesn't sound like a Stata-specific question.  You might get more
or better responses to this question if you asked this question in
another forum.

In terms of Stata code, how did you generate your dummy variable?

Daniel Lawson

On Mar 16, 2005, at 6:20 PM, Tae Hun Kim wrote:

> Hello.
> I would be greatfull if someone helps me to understand dummy variables.
>
> For example,
> Y= a+b*X+c*dum+d*(X*dum)+e
> where Y : income,  X : education(years),  dum=dummy variable (dum=1 if
> male, dum=0 if female)
>
> If I estimate this equation using OLS, recalulated coefficents are the
> same regardless of whether dum=1 if male (0 otherwise) or  dum=1 if
> female(0 otherwise).
> i.e.  if I define a dummy variable as dum=1 if male, o otherwise
>      male(1) : E(Y)= (a+c)+(b+d)X,  female(1) : E(Y)=a+bX
>       if I define a dummy variable as dum=1 if female, o otherwise
>      male(2) : E(Y)=a+bX,              female(2) : E(Y)= (a+c)+(b+d)X
> =>the coefficients of male(1) and male(2) equation are the same.
>
> (Question)
> 1. But when I estimate this equation using GMM or IV, the coefficients
> of male(1) and male(2) equation are not the same. Why?
> 2. If the coefficient are different, what is the criteria to define a
> dummy variable(male=1 or female=1) ?
>
> Thanks in advance
> TaeHun Kim
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