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USING%20DUMMY%20VARIABLES

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Illustration: Religion, Wealth, and Politics. TYPES OF RELATIONSHIP ... ILLUSTRATION 2: GOVERNMENTAL PERFORMANCE AND POLITICAL REGIMES. PROBLEMS AND QUESTIONS ... – PowerPoint PPT presentation

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Title: USING%20DUMMY%20VARIABLES


1
USING DUMMY VARIABLES
2
OUTLINE
  • Types of relationship spurious, enhancement,
    specification (interactive)
  • Creating dummy variables
  • Using dummy variables
  • In enhancement relationships (change of intercept
    but not of slope)
  • In interactive relationships (change of slope as
    well as of intercept)
  • Illustration Religion, Wealth, and Politics

3
TYPES OF RELATIONSHIP
  • Spurious (relationship between Y and X1 vanishes
    in presence of X2)
  • Enhancement (inclusion of X2 yields higher R2
    than equation with just X1i.e., affects strength
    of relationship)
  • Specification--or interaction (inclusion of X2
    affects form of relationship between Y and X1)

4
CREATING DUMMY VARIABLES
  • Transform categorical variables into
    interval-scale variables
  • Coding convention 0, 1
  • Binary form for each permutation e.g., North (0,
    1), South (0, 1), East (0, 1), West (0, 1)

5
ILLUSTRATION 1 RELIGION, WEALTH, AND
POLITICS Y support for Democratic Party
() X1 per capita wealth X2 predominant
religion (0 non-Catholic, 1 Catholic 0
non-Jewish, 1 Jewish 0 non-Protestant, 1
Protestant)
6
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7
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8
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9
ILLUSTRATION 2 GOVERNMENTAL PERFORMANCE AND
POLITICAL REGIMES
10
PROBLEMS AND QUESTIONS
  • Disenchantment with democracy in Latin
    Americaare popular judgments fair?
  • 1. How to assess democratic performance in Latin
    America?
  • 2. What comparison group for Latin America?
  • 3. How to measure democratic vs. nondemocratic
    performance across comparison group?

11
BASIC HYPOTHESES
  • H1 The greater the prevalence of democratic
    rule, the greater the provision of material
    benefits.
  • H2 The greater the prevalence of undemocratic
    (authoritarian) rule, the greater the provision
    of material benefits.
  • H3 The prevalence of democratic or undemocratic
    rule bears no systematic relationship to the
    relative provision of material benefits.

12
DATA AND VARIABLES
  • UniverseMiddle income countries55 in
    lower-middle, 41 in upper-middle, N96
  • Time frame1990-2004
  • Units of analysiscountry-years
  • Dependent variables
  • Annual GDP growth rate ()
  • Infant Mortality (per 1,000)
  • Primary School Enrollment ()

13
INDEPENDENT VARIABLES
  • Region _at_ World Bank (0, 1)
  • Democracy _at_ Freedom House (0, 1)
  • Level of democracy _at_ Smith, Ziegler
  • Liberal (0, 1)
  • Illiberal (0, 1)
  • Semidemocratic (0, 1)
  • Nondemocratic (0, 0)
  • Note Use of dummy variables

14
CONTROL VARIABLES
  • Wealth
  • Upper/lower income bracket (0, 1)
  • GDP per capita (1990, 2000)
  • Structure
  • Manufacturing as GDP (1990, 2000)

15
FORMAT FOR REGRESSIONS
  • Y a b1Wealth b2Structure
  • biRegioni bkRegionk
  • Y a b1Wealth b2 Structure
  • b3 Democracy

16
POLITICAL DETERMINANTS
  • __Growth__ __Mortality__
    __Schooling__
  • (1,088) (277)
    (369)
  • Democracy (0, 1) .4206 -10.1158
    6.0896
  • Nondemocracy (0, 0) -----
    ---- ----
  • Constant 3.9562 84.2483
    77.0707
  • R2 .0822 .5336
    .1758
  • Significant at .001 level or better.

17
DEMOCRACY BY REGION
  • __ Growth__ __ Mortality__
    __ Schooling__
  • (1,032) (266)
    (346)
  • Latin American
  • Caribbean
  • Democracy (0, 1) .2373 -11.8388
    8.5104
  • Other Democracy (0, 1) .3569 -10.4353
    4.5804
  • Nondemocracy (0, 0) ---- ----
    ----
  • Constant 3.9008 83.8488
    76.6599
  • R2 .0690 .5336
    .2027
  • Significant at .01 level or better.

18
IMPLICATIONS
  • 1. Democratic governments in Latin America and
    elsewhere have performed at least as well as
    authoritarian regimes in promoting economic
    growth.
  • 2. Democratic governments in Latin America and
    elsewhere have consistently outperformed
    authoritarian regimes with regard to infant
    mortality and school attendance.
  • 3. The deeper the democracy, the greater the
    provision of fundamental social benefits. not
    shown here

19
AND CAVEATS
  • Analysis of variance around the mean does not
    resolve legitimate public concern about the level
    of the mean
  • Average growth is 3.2 not 8.2.
  • Mean infant mortality is 30 per 1,000 not 10.
  • Average primary school attendance is 89 instead
    of 99.
  • And so on.
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