Suppose I have a categorical variable consisting of four levels: a, b, c, and d. When these levels are mutual exclusive, I would use dummy coding - so three dummies with for example level a as reference.

Is this dummy coding scheme still valid if two or more categories can overlap for a certain observation? For example, a person who has both level a and level c. Or does this mean I need to make four dummies instead?

  • $\begingroup$ I think it should work. But I would rather encode it into four levels instead of three. $\endgroup$ – peteR Jan 21 at 20:39
  • $\begingroup$ That's what my intuition tells me also, but it makes me wonder if four levels / dummies is correct. $\endgroup$ – Amonet Jan 22 at 7:40
  • $\begingroup$ Just do it. I cannot think of a reason why it should not be correct. $\endgroup$ – peteR Jan 22 at 13:17

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