Suppose you have two sets of categorical dummies:
A1 A2 A3 A4
B1 B2 B3 B4
When you regress Y on them you must drop one category from each dummy to avoid the dummy variable trap, i.e., Y = a + A1 + A2 + A3 + B1 + B2 + B3 + e.
So Stata's regression output looks like this:
A1 0.826
A2 0.224
A3 0.187
B1 0.376
B2 0.997
B3 0.736
_cons 0.556
Question: What does the coefficient for the constant represent? Is it the intercept of A4 plus the intercept for B4? If so, how does one ascertain the intercepts for A4 and B4 separately? Does one pick different dummies to omit and run the regression again?
Thx.
Jimmy Verner
Graduate Student
University of Texas at Dallas
Jimmy L. Verner, Jr.
Verner & Brumley, P.C.
3131 TurtleCreek Blvd.
Penthouse Suite
Dallas, Texas 75219
214.526.5234
214.526.0957.fax
[email protected]
www.vernerbrumley.com
Board Certified, Family Law and Civil Trial Law,
Texas Board of Legal Specialization
Also admitted in New Mexico
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