When a dummy variable is included in a multiple regression model, the interpretation of the estimated slope coefficient does not make any sense anymore.

Question

Quizplus · Accepted Answer

The interpretation of the estimated slope coefficient for the non-dummy variables in the model remains the same, but the interpretation of the intercept and the estimated slope coefficient for the dummy variable may change depending on the reference group chosen for the dummy variable. The interpretation of the estimated slope coefficient does make sense, but it will differ based on which group the dummy variable represents. The coefficient represents the difference in the dependent variable between the group the dummy variable represents and the reference group.

When a Dummy Variable Is Included in a Multiple Regression