How to Interpret dummy variable and constant results ?

Reply Sun 16 Aug, 2020 05:38 am
Hi everyone,

I want to study the effect of private universities systems with high tuition fees on income inequality in Europe.
Income inequality is measured by Gini coefficient of equivalised disposable income for the period 2008-2015 for all European countries except Croatia which I dropped due to a lack of data.
I used a dummy variable to account for university system. free is 0 and private is 1.

I found these results (picture below)

I have two questions :

1) Is it correct to interpret the result of the dummy "free uni" as follow : High tuition fees increase GinieqDI by 0.679 ?
2) I have trouble interpreting the constant result : If all my depedent variables are equal to 0 then Bo = 154.90
Which would mean that on average the Gini coefficients for the observed countries is 157,90 ?
But that doesn't make sense ! Gini is between 0 and 100

Thank you for your help

Ps : I uploaded the picture of my results in stata but I am not sure if you can see it
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Discussion • Score: 0 • Views: 2,068 • Replies: 1
No top replies

Reply Sun 16 Aug, 2020 12:31 pm
The intercept (often labeled the constant) is the expected mean value of Y when all X=0. Start with a regression equation with one predictor, X. If X sometimes equals 0, the intercept is simply the expected mean value of Y at that value. If X never equals 0, then the intercept has no intrinsic meaning.

If you have a nominal variable that has more than two levels, you need to create multiple dummy variables to "take the place of" the original nominal variable. ... You could also create dummy variables for all levels in the original variable, and simply drop one from each analysis.

I am sure the E.U. has all the necessary data.
0 Replies

Related Topics

Where is the US economy headed? - Discussion by au1929
The States Need Help - Discussion by Robert Gentel
Fiscal Cliff - Question by JPB
Let GM go Bankrupt - Discussion by Woiyo9
Sovereign debt - Question by JohnJD
  1. Forums
  2. » How to Interpret dummy variable and constant results ?
Copyright © 2024 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 02/22/2024 at 08:48:01