# “Dummy variable” versus “indicator variable” for nominal/categorical data

“Dummy variable” and “indicator variable” are labels frequently used terms to describe membership in a category with 0/1 coding; usually 0: Not a member of category, 1: Member of category.

On 11/26/2014 a quick search on scholar.google.com (with enclosing quotes) reveals “dummy variable” is used in about 318,000 articles, and “indicator variable” is used in about 112,000 articles. The term “dummy variable” also has a meaning in non-statistical mathematics of “bound variable” which is likely contributing to the greater use of “dummy variable” in indexed articles.

1. Are these terms always synonymous (within statistics)?
2. Are either of these terms ever acceptably applied to other forms of categorical coding (e.g. effect coding, Helmert coding, etc.)?
3. What statistical or disciplinary reasons are there to prefer one term over the other?

‡ So e.g. the dummy $x_i$ is an indicator variable for when the $i$th person $u_i$ is male (a member of set $M$):
where $\boldsymbol{1}_M(\cdot)$ is the indicator function for membership of $M$.