Re: st: RE: how to deal with categories?

[Andrea Bennett <mac.stata@gmail.com>]

Dear Martin,
I might have confused you. In the case of "age" I indeed have a  
continuous variable (which is your point) BUT in the case of income I  
have income-categories (due to survey structure) and have to deal with  
that. So, in the case of income categories present, would you think  
including an interaction dummy for the highest category to be sensible  
(because the category represents individuals with income>=10'000 USD;  
not like income>3'000<4'000)?

Many thanks in advance!

Andrea


On Jun 3, 2008, at 2:56 PM, Martin Weiss wrote:


> Regarding 1., it is hard to see why you let dummies eat up your  
> degrees of
> freedom when you have a continuous variable "income" which -regress-
> accepts. The fact that there is no upper limit for income does not  
> render it
> invalid as a covariate. Just include income itself without further  
> ado (pun
> intended :-) ).
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