9.14 Looking ahead

Every explanatory variable in this book has been a number — years, rupees, classes attended. Two of them were not, and we handled them by writing 0 and 1 without ever asking what that meant.

The next unit takes indicator variables seriously. It shows how a single regression can fit different intercepts for different groups, how interaction terms let it fit different slopes as well, and how the \(F\) test of Section 8.6 becomes a formal test of whether two groups obey the same relationship at all.

That last question — whether one model describes everybody — is where the machinery of this unit and the previous one comes together.