I would appreciate your views on the following...
For a Principal Component Analysis, we have N subjects and p variables. Say one of our variables is categorical (nominal) with categories corresponding to either 'yes', 'no', 'don't know' or 'confidential'. Would the 4 categories be entered into the PCA as 3 dummy binary variables...i.e. x1, x2 and x3 coded, perhaps, like so:
x1 x2 x3
yes 1 0 0
no 0 1 0
confidential 0 0 1
don't know 0 0 0
(where, here, 'don't know' is the reference category) i.e. just as in regression, a q category variable is entered as q-1 dummy variables.
Thanks so much for your views,
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