When I can see an inflection point in the scatter plot, does it make any sense at all to create a dummy variable such that higher than inflection x's are 1, and lower are 0 and then to interact that with the continuous?
e.g. say i have income in $ and age in days
maybe i can see in scatter plot that the income age chart inflects at around 50 years of age (18250 days).
Code:
gen age_high = 0 replace age_high = 1 if age > 18250
Code:
reg income age##age_high
0 Response to Interact a dummy against its own continuous
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