Trouble interpreting dummy variable results

#1
Hi everyone,

I want to study the effect of private universities systems with high tuition fees on income inequality in Europe.
Income inequality is measured by Gini coefficient of equivalised disposable income for the period 2008-2015 for all European countries except Croatia which I dropped due to a lack of data.
I used a dummy variable to account for university system. free is 0 and private is 1.

I found these results



I have two questions :


1) Is it correct to interpret the result of the dummy "free uni" as follow : High tuition fees increase GinieqDI by 0.679 ?
2) I have trouble interpreting the constant result : If all my depedent variables are equal to 0 then Bo = 154.90
Which would mean that on average the Gini coefficients for the observed countries is 157,90 ?
But that doesn't make sense ! Gini is between 0 and 100


Thank you for your help
Nour.
 
#2
It's difficult to tell what's going on without seeing output from a model. But, it sounds like the constant term tells you something about the "free uni". That is, if the university system is the only dummy variable you have.
 
#5
Just clarifying, the "free uni" variable is a dummy? 1 is free and 0 is private? If this is the case, then the constant term tells how the private uni influences the Gini.
 
#6
Just clarifying, the "free uni" variable is a dummy? 1 is free and 0 is private? If this is the case, then the constant term tells how the private uni influences the Gini.
Thank you very much for answering. Yes this is a variable dummy representing the countries in EU 27 that have state higher education systems.
So you mean that the private uni influence Gini by an increase of (154.89 + 0.67) 155.56 ?

But I don't understand how to interpret/read this result ?
is is a percentage? Furthermore, Gini is between 1 and 100 that is why I am really confused !


Thank you for helping
 
Last edited:

Dason

Ambassador to the humans
#7
The constant tells you what the prediction is when ALL the predictors are 0. I'm guessing that isn't something that can or does happen in your data.
 
#8
Thank you very much for answering. Yes this is a variable dummy representing the countries in EU 27 that have state higher education systems.
So you mean that the private uni influence Gini by an increase of (154.89 + 0.67) 155.56 ?

But I don't understand how to interpret/read this result ?
is is a percentage? Furthermore, Gini is between 1 and 100 that is why I am really confused !


Thank you for helping
I would think that if "free uni" is 0 then the 0.67 drops out and you're left with 154.89. To Dason's point, it doesn't make sense that all predictors are 0. But, "holding all other variables constant the private uni increases the mean Gini by 154.89" ? I can't remember how the Gini is calculated. Perhaps someone else can help with it's interpretation. Maybe the coefficients represent percent change, idk.