Re: st: cascading dummies

[Nick Cox <njcoxstata@gmail.com>]

As Richard said, Stata can tell you:

. findit cascade

STB-6   srd11 . . . . . . . . . Generating ordered "cascading" dummy variables
        (help cascade if installed) . . . . . . . . . . . . . . . R. Goldstein
        3/92    pp.19--22; STB Reprints Vol 1, pp.190--194
        add a set of new dummy variables that are cascading; that is,
        0/1 variables are created where a 1 is given if the case has
        the value <= value of lowest category

Accessible at http://www.stata.com/products/stb/journals/stb6.pdf

Nick

On Mon, Oct 1, 2012 at 7:59 PM, Shikha Sinha <shikha.sinha414@gmail.com> wrote:
> Thanks Richard!
>
> very helpful. What is the full reference of STB article, I am unable to find it.

On Mon, Oct 1, 2012 at 11:39 AM, Richard Goldstein
> <richgold@ix.netcom.com> wrote:

>> neither is wrong or right -- they answer slightly different questions; A
>> asks for each dummy whether, and by how, much it is different from the
>> reference group (you do realize that you should only include 4 of the
>> dummies, right?); B asks whether each differs from the preceding level
>>
>> you can -findit cascade- to find a program I wrote to implement
>> cascading dummies; the help file, and even more the STB article,
>> discusses the differences; note that you can obtain the answer to either
>> question by following up the original method of forming the variables
>> with the appropriate -test- command(s)

On 10/1/12 2:31 PM, Shikha Sinha wrote:

>>> Recently, I came across a new way of creating dummies and I wonder
>>> what the group thinks about this form.
>>>
>>> The independent variable X is coded as 1- very poor, and 5 as very
>>> rich. I want to estimate the effect by wealth quintile. I created the
>>> dummy the following ways, but I was told that this is wrong (A is
>>> wrong). The correct way to construct dummy is B and is called
>>> cascading dummies. I have never come across this before and would
>>> appreciate if you could shed light on the difference between the two
>>> and which is the correct way of creating dummies.
>>>
>>> A:
>>> id    Y       X1 (scale of 1-5),      dum1    dum2    dum3    dum4    dum5
>>> 1     100     5       0       0       0       0       1
>>> 2     200     4       0       0       0       1       0
>>> 3     300     3       0       0       1       0       0
>>> 4     239     2       0       1       0       0       0
>>> 5     345     1       1       0       0       0       0
>>>
>>>
>>> B:
>>> id    Y       X1 (scale of 1-5),      dum1    dum2    dum3    dum4    dum5
>>> 1     100     5       1       1       1       1       1
>>> 2     200     4       1       1       1       1       0
>>> 3     300     3       1       1       1       0       0
>>> 4     239     2       1       1       0       0       0
>>> 5     345     1       1       0       0       0       0
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