00:01
So for this problem, when we use dummy variables, the way or the purpose of using dummy variables in a linear regression is for including categorical variables in linear regression models.
00:37
For instance, let's say we are trying to predict annual salary, where our two variables are years of experience, y o e for short, and gender.
01:05
This model then we would do as y is equal to some intercept, so i'll call that b0, plus b1 times x1, where let's say that x1 represents the years of experience, plus b2 times x2, where x2 is a dummy variable.
01:31
We have that x2 equals, we could say that x2 equals 1 if male, or 0 if female.
01:40
And then we could say that as well, one of the variables could be level of education...
