Categorical variable

A categorical variable takes values in a finite or countable set of labels. A regression model usually represents an unordered categorical predictor by indicator variables relative to a reference level in a regression factor.

An ordinal categorical variable has categories with a meaningful order. Replacing its levels by numerical scores imposes a quantitative spacing and can replace several unrelated level effects by one regression coefficient when a linear trend is scientifically reasonable.

An indicator variable of an event $A$ is one on $A$ and zero outside $A$. Indicator columns encode categorical levels in a design matrix.