Re: st: Interpretation of factor variables

[Maarten Buis <maartenlbuis@gmail.com>]

The first line gives you the effect of continuous when dummy == 0 and
the second line gives you the effect of continuous when dummy == 1.
This happend because you did not enter the main effect of continuous.
This happened because you entered the main effect of dummy but not
(maybe forgot) the main effect of continuous. If you had also entered
the main effect of continous, then you would have gotten and effect of
continuous, which would mean the effect of continuous when dummy == 0,
and one interaction which would mean how much the effect of continous
when dummy == 0 differs from the effect of continous when dummy == 1.
The two models are obviously equivalent, so which one you choose
depends only on which one you find easier to interpret.

-- Maarten

On Thu, Jul 11, 2013 at 1:00 PM, Yu Chen, PhD <profyuchen@gmail.com> wrote:
> Dear Statalist,
> I have a dummy variable that takes values of one or zero, and a
> continuous variable. I ran the following regression.
> Dependent Variable (DV) = Dummy + Dummy*Continuous + other control
> variables. I used factor variables (i.e., i.Dummy +
> i.Dummy#c.Continuous )
> I got results as below. My question is how should I interpret the two
> lines below Dummy#c.Continuous? The first line shows a 0. I interpret
> it as Dummy takes 0 for this line. However, if Dummy takes 0, the
> whole term should be zero and should be eliminated from the results.
> But Stata still gave me a Coef. What is going on?
> Thank you in advance for your help.
>
>
> ------------------------------------------------------------------------------
>         DV |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
> -------------+----------------------------------------------------------------
> Dummy#c.Continuous |
>           0  |   31.54672   9.438251     3.34   0.001     13.04526    50.04818
>           1  |   37.70141   7.609734     4.95   0.000     22.78433     52.6185
>              |
> Dummy |   .1026062   .1648457     0.62   0.534    -.2205349    .4257472
>
>
> Yu Chen
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-- 
---------------------------------
Maarten L. Buis
WZB
Reichpietschufer 50
10785 Berlin
Germany

http://www.maartenbuis.nl
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