Question

Explain what the dummy variables are (also called indicator variables or binary variables). Explain how they are used in the regression. (Could you please don't use your handwriting to answer this question to be easy for me to solve...thanks)

Answer 1

Regression analysis vales are measure with two types of values in nature

1. Quantitative

2.Qulaitative

Quantitative values are measured with well defined scale. but qulitative values and their variables can not be defined on a well defined scale.

mostly choice of questions like say for example, "male or female", "positive or negative", taller or smaller,"emplyed or unemployed" .so they are defined on a nominal scale. Such variables can be quantified by artificially constructing the variables that takes the values, e.g., 1 and 0 where “1” indicates usually the presence of attribute and “0” indicates usually the absence of attribute.

Such variables classify the data into mutually exclusive categories. These variables are called indicator variable or dummy variables

I will run the normal regression analysis with dummy variables

Go to data tab --> data analysis --> choose regression