Even the extensive Stata manuals do not take on the task of trying to explain all the statistical possibilities and pitfalls associated with every technique implemented. Why should they?
The literature -- in this case make that literatures -- is hopelessly divided on whether
1. Correlation makes full sense only for (approximately) continuous variables.
2. You need different ideas of correlation when at least one variable is not (approximately) continuous.
Even with two dummies or indicators, there is a range of possibilities.
It is better to think out what makes sense for your project than to be in fear that what you are doing is incorrect according to some authorities or experts.
Nick
[email protected]
Christian Weiß
thx a lot, I already had a look at this discussion and Nick's article.
Unfortunately, I can't find a clear answer to my question. First, the
discussion / article is about correlation a continous and a discrete
variable, I am wondering though how to deal with a dummy (0 / 1)
variable (perhaps the same way?).
Second, in his mail Nick says - if I understood him right - that the
correlation between a discrete and continous variable can make sense,
but that it depends (on what?).
Still, I find it surprising that there is no comment / option in the
correlate commands of Stata, as I figure that this is a frequently
occuring issue (as Nick mentions). Afterall, I might be usual (and
easiest way?) to exclude dummy variables from a correlation matrix?`
*
* For searches and help try:
* http://www.stata.com/help.cgi?search
* http://www.stata.com/support/statalist/faq
* http://www.ats.ucla.edu/stat/stata/
