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RE: st: correcting skewness of an indep variables


From   "Mihes, Dimitrie" <[email protected]>
To   "[email protected]" <[email protected]>
Subject   RE: st: correcting skewness of an indep variables
Date   Sun, 21 Jul 2013 09:52:35 +0000

I am using OLS to model the relationship between amount of foreign aid (dependent variable, logged) and media coverage (number of newspaper articles, count variable). I assume a linear relationship between the two and use the "media coverage" variable as a continuous predictor. There is a spike in 0, however, in the count variable which makes it highly skewed to the right.
Although this problem was addressed in this thread, I would like to better understand why using a dummy variable alongside the original variable would improve the model. What does the dummy variable do for the skewness? how can it be interpreted in parallel with the continuous part of the model? Moreover, do the values of 0 in the count variable have to be kept or replaced as "missing values" ? 
I am also using a second IV, measuring the number of negative articles, which naturally spikes at the value of 0 as well, but has more values of 0 than the "total amount of articles" variable. Does the dummy variable control for the zeros in this variable as well?

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