st: dummy trapped but not sure why

[bdeaton@uoguelph.ca]

Greetings,

I am dummy trapped but I'm not sure why.

I am generating state dummy variables (13) for each of 1,000 counties  
in my data set. In addition, I am generating a variable: intest2 that  
assigns a unique number to counties within a group of states. (For  
example, each observation within three states might receive the # 100,  
the observations within another three states might receive the number  
50, etc.) The unit of observation is a county. Each state has well  
over 20 observations.

When I regress the dependent variable (which is continuous) on n-1  
(i.e.,12) state dummy variables and the intest2 variable, I fall into  
the dummy variable trap. Empirically, I am fairly confident that this  
is what the program is telling me. Conceptually, however, I'm not sure  
why this is the case.

Any thoughts? I've included some of my commands in the hope that they  
may be useful to a potential problem solver:

gen STAL = (state == "AL")
gen STGA = (state == "GA")
gen STKY = (state == "KY")
gen STMD = (state == "MD")
gen STMS = (state == "MISS")
gen STNC = (state == "NC")
gen STOH = (state == "OH")
gen STPA = (state == "PA")
gen STTN = (state == "TN")
gen STVA = (state == "VA")
gen STWV = (state == "WV")
gen STNY = (state == "NY")
gen STSC = (state == "SC")

gen intest2 = 100 if state == "OH" | state == "VA" | state == "WV"
replace intest2 = 50 if state == "AL"| state == "KY" | state == "MD" |  
state == "NY"|  state == "PA" | state == "SC"
replace intest2 = 33 if state == "GA" | state == "NC" | state == "TN"
replace intest2 = 25 if state == "MISS"

regress Y intest2 STAL STGA STKY STMD STNC STOH STPA STTN STVA STNY STSC STWV

<<<this regression exhibits perfect collinearity but I'm not sure why>>>


Many thanks,

Brady Deaton, Jr.






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