In this tutorial we will learn how to encode or convert categorical variables in numbers.

Categorical variables are generally of 2 types: Nominal and Ordinal

**1. Ordinal Variables** are those which have a proper order.

Eg. High , Medium, Low - Here high has the highest priority while low has the least priority High > Medium > Low.

Similarly, Excellent > Average> Poor- Here Excellent is considered as the best while Poor having the least priority.

Such variables which exhibit an order are **ordinal variables.**

**2. Nominal variables** are those which do not have any order: eg. Weather: Sunny, Rainy, Winter - these 3 weathers do not have any priority

There are different methods to encode these variables in Python.

Let us firstly load pandas

`import pandas as pd`

**Encoding Ordinal Variables**

For encoding ordinal variables, we can use **sklearn's LabelEncoder.** Let us initialise our LabelEncoder as **le**

```
from sklearn.preprocessing import LabelEncoder
le = LabelEncoder()
```

Let us create a dataframe where we have **Dependents** column taking values 0,1, 2, 3+ . Here we have 3+ > 2 > 1 > 0 . Thus it is an ordinal variable.

```
df = pd.DataFrame({"Dependents" : ['0','0','1','1','2','2','3+']})
print(df)
```

Using **fit_transform** we can create a new column named ** Dependents2, ** where it has encoded our **Dependents** column in our df.

```
df["Dependents2"] = le.fit_transform(df["Dependents"])
print(df)
```

In the output below you can see that it has automatically considered 3+ as 3.

Suppose if you want your original column back then you can use **inverse_transform** function in your encoded column **Dependents2.**

```
df['inverse_transformed'] = le.inverse_transform(df.Dependents2)
print(df)
```

In the output you can see that it has converted 3 to 3+ in inverse_transformed columns.

**Note: LabelEncoder encodes categorical variables only in ascending order. **

Let us consider another dataframe where we have Sales_Status column talking values as : High, Medium and Low. Since High > Medium > Low , therefore it is an ordinal variable.

```
df = pd.DataFrame({"Sales_Status" : ['High','High','Medium','Medium','Low','Low','High']})
print(df)
```

If we apply LabelEncoder on Sales_Status column then we can see that It has mapped High as 0, Low as 1 and Medium as 2. This is because **LabelEncoder** is encoding these variables on the basis of alphabetical order.

```
df["Using_Label_Encoder"] = le.fit_transform(df["Sales_Status"])
print(df)
```

However, this is incorrect as we know this High should get the highest number. Thus,** We cannot use LabelEncoder in this situation. **For this we create a dictionary named **Ratings** which will be used for mapping the correct labels.

`Ratings = {'Low' : 0, 'Medium' : 1, 'High' : 2}`

Now using **map** function we can map our dictionary **Ratings ** to our Sales_Status column.

```
df['Using_Mapping'] = df.Sales_Status.map(Ratings)
print(df)
```

You can see in the output below that the last column **Using_Mapping** has now applied the correct mapping to **Sales_Status** column.

**Encoding Nominal Variables**

Let us consider a dataframe which has different Departments: Consulting, Technology and Outsourcing. Here clearly there is no order in these departments, thus ** we cannot use label encoder.**

We can create 3 columns for each of them namely: Dep_consulting, dep_technology and dep_outsourcing.

When the department is consulting then Dep_consulting = 1 and other 2 variables are 0.

Similarly for technology department Dep_technology = 1 and other 2 will be 0.

Lastly, for outsourcing department dep_outsourcing = 1 and others as 0.

**Note: **It can never happen that there can be more than one 1 in a set of dummy variables. In a single row for dummy variables there can be at most one 1.

When categorical variables can be expressed in 1-0 notation - these are called** dummy variables.**

Now let us create our DataFrame

```
data2 = pd.DataFrame({'Department': ['Consulting','Technology','Consulting','Consulting','Outsourcing']})
print(data2)
```

Using pandas' get_dummies( ) function we can create dummy variables with a single line of code.

For each department name have added a **prefix "Dep"**

get_dummies( ) only creates dummy variables. To append it in our data we use pandas' concat function:

Let us firstly save our dummy variables in a dataset.

`dummy_variables = pd.get_dummies(data2.Department,prefix = "Dep")`

We now concatenate our original data using pd.concat( ) , by defining axis = 1 or axis = "columns" we are telling Python to add the columns horizontally (and not append them as rows).

```
pd.concat([data2,dummy_variables],axis =1)
#alternatively
pd.concat([data2,dummy_variables],axis = "columns")
```

When Dep_Consulting = 1 and Dep_Technology is 0 then it is self-implied that dep_outsourcing will be 0. Thus in this case we only need 3-1 = 2 dummy variables. We can drop the first column by specifying **drop_first = True.**

```
dummy_variables = pd.get_dummies(data2.Department,prefix = "Dep",drop_first=True)
pd.concat([data2,dummy_variables],axis = "columns")
```

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