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Interpreting Dummy Variable Coefficients After Non-Linear Transformations

Fri, 06 Jul 2018 13:58:19 GMT

Dummy variables - ones that take only the values zero and one - are commonly used as regressors in regression models. I've devoted several posts to discussing various aspects of such variables, notably here, but also here, here, and here. When the regression model in question is linear, in both the variables and the parameters, the interpretation of coefficient of such a dummy variable is simple. Suppose that the model takes the form:     yi = α + β Di + Σj γj Xji + εi ...