I have data for neighbourhoods with median income. I also have a standard low-income cutoff. (Just using regression analysis) I feel it would lead to a simpler and cleaner result if I just use the cutoff to code the income variable into a dummy (1 for low-income neighbourhood).
Is this okay to do? Or is it better to just use the average where it's available. I'm planning to do this for other quantities too. And I don't want to run into trouble with hypothesis testing.