Video 5: Dummy Variables

This video discusses what are dummy variables, how do we construct them, and how do we interpret their coefficients in a multiple or multivariate linear regression. TABLE OF CONTENTS: 00:00 Introduction 00:10 Continuous vs. Categorical Variables 01:48 The Problem with Categorical Variables 02:52 Dummy Variables: Representing Categories 03:48 Data for Example: Professors’ Salaries 05:27 Exploring the Data 08:48 Representing Two Categories: Qualification 09:39 Data Table with Professional Dummy 10:02 Regressing Salary on Qualification 11:50 Comparing Salaries by Qualification 13:02 Qualification Regression Result 13:44 Interpreting the Coefficients for Qualification 14:45 More than Two Categories: Rank 15:43 Regressing Salary on Ranks 17:52 Data Table with Rank Dummies 18:19 Rank Regression Result 18:48 Interpreting the Coefficients for Qualification 21:14 Rank Regression Result (excluding assistant) 22:45 How do we interpret these?