I need to recode the variable school setting (urban, sub-urban and rural settings) into a dummy variable. I know that when creating a dummy variable, there is one category less (so 2 rather than three conditions) and that the urban is the largest group and should be used as baseline (not sure if baseline is the right word, but hopefully you know what I mean). However, I don't know what to do from here.
Is the variable changed into: 1. Two dummy variables: setting 1 with urban/sub-urban and setting 2 with urban/rural? 2. One variable where urban is given the value 1, and urban and sub-urban are given the value 0? 3. Both? 4. Have I completely missed something?
Hope you can help me!!