Page "Dummy variable (statistics)" Paragraph 40

The expectation values can be interpreted as: The mean salary of public school teachers in the West is equal to the intercept term α < sub > 1 </ sub > in the multiple regression equation and the differential intercept coefficients, α < sub > 2 </ sub > and α < sub > 3 </ sub >, explain by how much the mean salaries of teachers in the North and South Regions vary from that of the teachers in the West.

Thus, the mean salaries of teachers in the North and South is compared against the mean salary of the teachers in the West.

Hence, the West Region becomes the base group or the benchmark group, i. e., the group against which the comparisons are made.

The omitted category, i. e., the category to which no dummy is assigned, is taken as the base group category.