[R-lang] 3 Level IV

[Peter Graff]

Dear R-Lang,

I have a question about how to code a 3-level IV in a regression.

The 3 levels are motivated by 2 2-level predictors of theoretical interest (A/B and C/D):

Level 1: A C
Level 2: A D
Level 3: B D

Is it reasonable to code:

A versus B, C versus D, Interaction

Or ist it better to code:

A v B, AC v AD

The first coding reflects the theoretical interest more directly, the second coding has considerably less collinearity.

Thank you very much,

Peter Graff