What coefficients are used for categorical data, representing average differences relative to a baseline?

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What coefficients are used for categorical data, representing average differences relative to a baseline?

Dummy variables encode categorical data in regression, and their coefficients measure how much the outcome differs on average from the baseline category. When a categorical variable has k categories, you create k−1 dummy indicators, and the category not represented by a dummy serves as the reference or baseline. The coefficient on a given dummy estimates the average difference in the outcome between that category and the baseline, holding other predictors constant. The intercept, by contrast, represents the expected outcome for the baseline category when all other predictors are zero. Slopes pertain to changes per unit of a continuous predictor, and non-linear terms capture curvature or more complex shapes, not category-to-baseline differences.

Dummy variables encode categorical data in regression, and their coefficients measure how much the outcome differs on average from the baseline category. When a categorical variable has k categories, you create k−1 dummy indicators, and the category not represented by a dummy serves as the reference or baseline. The coefficient on a given dummy estimates the average difference in the outcome between that category and the baseline, holding other predictors constant. The intercept, by contrast, represents the expected outcome for the baseline category when all other predictors are zero. Slopes pertain to changes per unit of a continuous predictor, and non-linear terms capture curvature or more complex shapes, not category-to-baseline differences.

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