Suppose I have a categorical variable neighborhood, which can take the classes Neighborhood1, Neighborhood2, Neighborhood3.
I would like to know which neighborhoods can be grouped and what neighborhoods differ in their effect from the rest, and then merge the ones with similar effects into one class.
I thought about running a logistic regression model and group all the classes with no statistical significance into one. (A note here, I would run the model with no intercept, because the baseline class method wouldn't be appropriate)
Do you think that is viable? Any other suggestion on how to proceed?