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From |
Maarten buis <[email protected]> |

To |
[email protected] |

Subject |
Re: st: missing dummy variable |

Date |
Thu, 4 Oct 2007 14:15:46 +0100 (BST) |

--- Ben John <[email protected]> wrote: > I wonder whether there is a solution to avoid missing the first dummy > variable in stata programm? I need all of the dummy variables in the > equations. I am first going to explain that both models contain exactly the same information, before I am going to tell you how to add all dummies. Say we want to know how foreign and domestic cars differ with respect to mpg. We can do that in two ways: We can do a regression of mpg on a dummy which is 1 for foreign and 0 for domestic cars. The equation than looks like this: mpg = b0 + b1 * foreign The expected mpg for foreign cars is than: E(mpg|foreign) = b0 + b1 * 1 = b0 + b1 The expected mpg for domestic cars is than: E(mpg|foreign) = b0 + b1 * 0 = b0 So the constant tells you the expected mpg for domestic cars and b1 tells you how much foreign cars differ from domestic cars. An alternative would be to add a dummie for foreign cars and a dummie for domestic cars: mpg = b1 * foreign + b2 * domestic The expected mpg for foreign cars is than: E(mpg|foreign) = b1 * 1 + b2 * 0 = b1 The expected mpg for domestic cars is than: E(mpg|foreign) = b1 * 0 + b2 * 1 = b2 So now b1 and b2 tell you the expected value of respectively foreign and domestic cars. The two model contain exactly the same information: Say that the mean mpg for domestic cars is 20 and is 5 more for foreign cars is exactly the same as saying that the mean mpg is 20 for domestic cars and 25 for foreign cars. You may have noticed that in the second model (both dummies) I did not have a constant in the equation, this is delibarate. If you want to enter all dummies you have to exclude the constant. The way to do that is to add the -noconst- option in Stata, see the example below: *------------------ begin example --------------- sysuse auto, clear gen domestic = !foreign reg mpg foreign reg mpg foreign domestic, noconst *------------------- end example ---------------- (For more on how to use examples I sent to the Statalist, see http://home.fsw.vu.nl/m.buis/stata/exampleFAQ.html ) Hope this helps, Maarten ----------------------------------------- Maarten L. Buis Department of Social Research Methodology Vrije Universiteit Amsterdam Boelelaan 1081 1081 HV Amsterdam The Netherlands visiting address: Buitenveldertselaan 3 (Metropolitan), room Z434 +31 20 5986715 http://home.fsw.vu.nl/m.buis/ ----------------------------------------- ___________________________________________________________ Want ideas for reducing your carbon footprint? Visit Yahoo! For Good http://uk.promotions.yahoo.com/forgood/environment.html * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**Re: st: missing dummy variable***From:*Richard Goldstein <[email protected]>

**References**:**st: missing dummy variable***From:*Ben John <[email protected]>

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