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Re: st: RE: Econometrics Theory Questions on Dummies and CorrelationAnalysis


From   Paul Millar <paul.millar@shaw.ca>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: RE: Econometrics Theory Questions on Dummies and CorrelationAnalysis
Date   Mon, 18 Apr 2005 11:38:21 -0600

on Dummies and Correlation Analysis...

1. Is there any theory that prohibit one from undertaking a
   correlation analysis (i.e., correlation matrix) with either
   with Pearson or Spearman rank correlation test on variables,
   which are all dummies?

Although technically there doesn't seem to be anything preventing the kind of analysis you propose, from a theoretical (or at least methodological) point of view you wouldn't normally use this method for at least two reasons.
1) The level of measurement of the variables does not coincide with the level of measurement of the techniques.  Pearson correlations are designed for interval (or ratio) measures and Spearman for ordinal.  You have nominal measures (or so it seems).
2) It is more complex than required, and potentially obscures, rather than helps, understanding of the relationships between the variables.  A series of simple crosstabs might be more illuminating.



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