u07d1 Dummy Predictor Variable and Multiple Regression

You may choose one of the following questions to discuss your answer:
1. Why is it acceptable to use a dichotomous predictor variable in a regression when it is not
usually acceptable to use a categorical variable that has more than two values as a
predictor in regression? Identify a research question from your professional life, research
interests, or everyday experience that could be addressed by this analysis.
2. How does the interpretation of regression coefficients differ for dummy coding of
dummy variables versus effect coding of dummy variables? Identify a research question
from your professional life, research interests, or everyday experience that could be
addressed by this analysis.
3. How does orthogonal coding of dummy variables differ from dummy and effect coding?
Identify a research question from your professional life, research interests, or everyday
experience that could be addressed by this analysis.
How does orthogonal coding of dummy variables differ from dummy and effect coding? Identify
a research question from your professional life, research interests, or everyday experience that
could be addressed by this analysis.
In a regression analysis where there are multiple groups, dummy variables that represent group
membership equals the degrees of freedom (k - 1) designated by a Yes/No response across
groups. For example, if we have survey data corresponding to specific group membership and
there are three groups, we might set up two dummy variables (k 1) designated as A1 and A2
with a binary coding system, where 1=Yes, 0=No for each of two variables. Subsequently a 0
code on both of the dummy variables will consequently represent membership in the last group.
The last group that receives the zero scores is considered the base or comparison group. The bi
coefficients for each of the two dummy variables represent the difference in means of each of the
dummy variables with the comparison group (Warner, 2008).
In multiple group effect coded regression analysis instead of using zeros to represent the
comparison group, the base group uses codes of -1 to represent membership. One of the main
differences between effect and dummy coding is effect coding uses an unweighted grand mean
which is basically the average of the N values of each of the groups. In this case the b0
coefficient equals the grand mean and the effects of the bi coefficients represent the contrasting
differences between the group means and the grand mean. Therefore, the basic difference
between dummy coding and effect coding is the relationship between the b0 and bi coefficients
and how they relate to the grand mean and group means (Warner, 2008).
An orthogonal regression analysis is much different than both of the statistical operations above.
The main principle in orthogonal coding is setting up contrasts between groups that are

uncorrelated or independent (Warner, 2008). In a multiple group regression involving orthogonal

coding of predictor variables, the codes across each row must equal zero thus establishing
independence. The orthogonal codes used are usually -1, 1 and 0 and the group with the
positive sign is contrasted with the group with the negative sign, and the group with zero is
ignored.
An interesting study on fitness and weight loss using orthogonal coding might be to establish
variables of anaerobic, aerobic and combination routines to contrast the means of each
orthogonal coded variable to determine which exercise routine yielded the highest weight loss.
Dummy predictor variables E1 and E2 would be coded to represent orthogonal contrasts. E1
effect coded variable would compare the mean of Group 1 (anaerobic) with the mean of Group 2
(aerobic). E2 effect coded variable would compare the average of the first two group means with
the mean of Group 3 (anaerobic and aerobic). Assessing whether the groups are orthogonal
would be established by determining whether the sum of the products is equal to zero.
Anthony Rhodes
General Psychology PhD

References
Warner, R.M. (2008). Applied statistics: From Bivariate Through Multivariate Techniques.
Thousand Oaks, CA: Sage Publications. ISBN: 9780761927723.