Suggestions for the Analysis of Qualitative Dependent Variables

Abstract

The interpretation of regression coefficients when the dependent variable is qualitative is not impaired by the scale variance which accrues from order preserving transformations of the dependent variable. The article compares the scale variance of dependent qualitative variables to the more familiar scale variance of independent or dummy variables. Further analysis is conducted about the properties of trichotomous dependent variables as applied to a specific example in the estimation of revealed preference and public choice.