Re: st: Mlogit with factor variables

[Maarten Buis <maartenlbuis@gmail.com>]

On Tue, Jan 22, 2013 at 1:50 PM, Saki Tapsell wrote:
> I run the multinomial logit model with using y as dependent variable,
> and sector and firm_size as independent variables.
>
> "Sector" is a factor variable (1 = food, 2 = tobacco, 3 = textiles, 4
> = apparel).
>
> I can do:
>
> mlogit y ib1.sector firm_size
>
> But the tobacco sector has a very small sample, so I don't want to
> include that but without dropping that data entirely.  So I do:
>
> mlogit y i1.sector i3.sector i4.sector  firm_size
>
> Which seems to work.  mlogit uses sector == 1   as the base.

That must be incorrect. With that syntax Stata must use sector==2 as
the base, which is not what you wanted

> But now I want to use the command "prchange" which doesn't like factor
> variables.  So I have to convert this to dummy variables.  But if I
> do:
>
> mlogit y sector1 sector3 sector4 firm_size
>
> Then it no longer uses sector1 as the base.  and I think treats them
> as binary independent variables.

It is equivalent to your previous (wrong) syntax: the base is sector == 2.

You have two options: either you drop all tobacco industries or you
merge the category tobacco with some other category, probably food.

For the first option type:

drop if sector == 2

or alternatively (better):

gen byte touse = ( sector != 2 )
mlogit y i.sector firm_size if touse == 1

I often abreviate this as:
mlogit y i.sector firm_size if touse

For the second option type
gen sector2 = sector
replace sector2 = 1 if sector2 == 2
mlogit y i.sector2 firm_size

Hope this helps,
Maarten

---------------------------------
Maarten L. Buis
WZB
Reichpietschufer 50
10785 Berlin
Germany

http://www.maartenbuis.nl
---------------------------------
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