Economics 310

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Economics 310

• Lecture 10
• Dummy Variables

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Dummy Variables

• Zero-one variables
• Bernoulli Variables
• Qualitative variables
• Used to handle yes-no, possess-dont possess try
  situations

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Dummy Variable as only Explanatory Variable
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Dummy Variable as only Explanatory Variable
Y
?1
?1?2
D0
D1
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Dummy as intercept shifter
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Dummy as intercept shifter
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Qualitative variable with more than 2 classes
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Qualitative variable with more than 2 classes
Y
X