Regression analysis in health services research: the use of dummy variables

Dummy variables frequently are used in regression analysis but often in an incorrect fashion. A brief review of examples in the medical care literature showed that the interpretation of dummy variable regression coefficients and their significance was often incorrect or unclear. This article shows how dummy variables can be used and assessed properly. The importance of testing for the joint effect of a group of dummy variables is stressed. It also gives a standard and useful extension of the dummy variable technique to testing for the effect of collections of variables.