August 2011
Beginner to intermediate
202 pages
5h 45m
English
Content preview from Business Applications of Multiple Regression
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MODEL BUILDING 145
The use of dummy variables when there are a large number of catego-
ries can greatly expand the number of variables in use. One of the pieces of
information in the author’s dissertation was state. Coding this into dummy
variables required 49 (or 50 – 1) different variables. When the number of
variables grows in this fashion, you must make sure you have an adequate
sample size to support the expanded number of variables. As before, we
recommend a minimum of 5 observations for each variable, including each
dummy variable, with 10 per variable being even better. This was not a
problem for the author because he had over 22,00 ...
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