A dummy variable is a numerical variable used in regression analysis to represent subgroups of the sample in your study. In research design, a dummy variable is often used to distinguish different treatment groups.My question is "How do we interpret the parameter estimates for dummy variables in regression?"
Thank you for your answer in advance
It's the difference between the category in question and the reference (baseline category). For example, if group A has a mean of 10 and group B has a mean of 15, and you dummy-code this variable with A as the baseline, then the coefficient (parameter estimate) for "B" will be 5.
See the link for your question:
http://personal.rhul.ac.uk/uhte/006/ec2203/Lecture%2013_Use%20and%20Interpretation%20of%20Dummy%20Variables.pdf
For effect coding, see https://stats.idre.ucla.edu/other/mult-pkg/faq/general/faqwhat-is-effect-coding/.
There are plenty of good textbooks on the interpretation of parameters in models with dummy regressors. I recommend you 'Econometrics by example' (author: D. Gujarati) or 'Regression with Dummy Variables' (author: M.A. Hardy). You can see also: https://arxiv.org/ftp/arxiv/papers/1511/1511.05728.pdf
Regards,
Hanna
we always interpret as a difference from reference category. software automatically selects one reference category for comparison of study results.
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