Multiple Regression with Categorical Variables
Regression with Non-Continuous Variables Regression with Non-Continuous Variables Introduction So, regression turns out to be a very useful tool for both understanding the impact of a set of independent variables and predicting values of \(\hat{y}\) for some dependent variable. But, thus far, we’ve only looked at continuous variables, so you might be wondering if we can use categorical variables, and the answer is “yes”! However, using them requires a bit more care in interpretation! While unit increases are easy to understand with continuous variables, we have to think a bit differently about categorical variables. Additionally, we have to be very careful about how they’re coded! Make sure you’ve got your factors ordered in the appropriate way (if ordinal). Once you’ve done that, then the challenge (and it’s not a big one) is just in the interpretation. As always, it’s easiest to see in an example! Breif No...