How to put variables related by an IF condition in a model

The first variable is 'SMOKE' that indicate if the person is a smoker or not. The second variable 'Daily' is related to the first by an If condition: If the person is a smoker then does he smoke daily or not.

How can I put these two variables in my model?

EDIT: (1)I prefer to exploit the evident ordering from non-smoking to smoker to daily smoker. (If this will be significant in my model)

(2) Smoking is an independant variable in my model (In fact, It's a risk factor for a disease)

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Whether any suggested solution is appropriate will depend on two things, which I hope you can clarify in an edit to your question: (1) Do you hope to exploit the evident ordering from non-smoking to smoker to daily smoker? (2) Will this variable be used as an independent variable or dependent (response) variable in the model? –  whuber Apr 29 at 15:54
Thank you, I have edited my question, how can I choose the appropriate method then? –  user42987 Apr 29 at 16:20

I would simply encode the 'product' of the variables, so instead of:

SMOKER, DAILY

You would then have:

NON-SMOKER, SMOKER-NON-DAILY, SMOKER-DAILY

Ultimately resulting in interaction variables. The advantage is, that you can now also include additional categories such as monthly by adding one variable. Also, you don't lose the semantic of each category and it will be easy to inspect the outcoming models.

As to your edit, if you want to preserve order (which order?), you might want to make a continuous variable with different frequency levels (for instance: daily = 1/1, weekly = 1/7, ..., non-smoker = 0).

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