120 Dummy variables as proportion of yes

In this video, we explain a key property of dummy variables: their mean directly represents a proportion. Using a simple example, we show that when a variable only takes values of 0 and 1, its average is simply the share of observations equal to 1 (the “yes” category). We walk through the calculation step by step to build intuition, then connect this idea to real data using Stata. By comparing the outputs of the “tabulate” and “summarize” commands, we demonstrate that the mean of a dummy variable exactly matches the percentage of observations in the category coded as 1. This provides a quick and powerful way to interpret your data at a glance. Visit AxiomTutoring.com and subscribe to @AxiomTutoringCourses.