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From |
Derya Karaci <dkaraci@yahoo.com> |

To |
"statalist@hsphsun2.harvard.edu" <statalist@hsphsun2.harvard.edu> |

Subject |
st: Indicator vs index |

Date |
Fri, 29 Mar 2013 13:41:23 -0700 (PDT) |

Dear all, Suppose there are three explanatory variables (1) an indicator - say 'dummy', and (2) a variable that takes the values of 0,0.5 and 1, say "index" (2) a continuous variable between 0 and 1 - say 'random'. Suppose the first question is if the weather is bad or good, and the second one lets you choose between bad, mediocre and good, and the third one allows you to rate it between 0 and 1. All variables have an average of 0.5. I run a simple regression on, say your ice cream consumption "icr" (sorry for the example..). The coefficients turn out very different. In the example below, "reg icr dummy" has a coefficient of 15, meaning that moving from 0 to 1 increases your consumption by 15 kilograms. But "reg icr index" has a coefficient of 20....and "reg icr dummy" has a coefficient of 30. I am also adding this very simple data I used for illustration below. These coefficients make sense by looking at the data. But how to interpret them? Arethey comparable for interpretation purposes? Suppose going from bad weather to good weather, can I say icecreamconsumption increases by 15, 20 and 30 kilograms respectively, and allowing more information b/w 0 and 1 increases the predicted effect? In short, I want to get a sense of how the extra information between 0 and 1 helps me. Many thanks for any help! Any insight will be appreciated. icrdummyindex random 100.029977 200.031412 300.039247 400.101387 500.135224 600.178009 700.230841 800.244429 900.298035 1000.3097 110.5.317844 120.5.483295 130.5.48904 140.5.518647 150.5.519864 161.5.53802 171.5.539834 181.5.555991 191.5.593809 201.5.646822 2111.664031 2211.685778 2311.712493 2411.717916 2511.786182 2611.844232 2711.844532 2811.9128 2911.994404 3011.998831 Derya * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/faqs/resources/statalist-faq/ * http://www.ats.ucla.edu/stat/stata/

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