/* Creates k-1 0-1 dummy variables for each categorical variable. */
/* Example call:   %dummy(dataset=one,var=x1 x2);                 */
/* where x1 and x2 are categorical variables.                     */
/* For this example, dummy returns dataset one_new with new       */ 
/* variables x1_1, x1_2, ... , x1_k1-1 for k1 categories          */
/* variables x2_1, x2_2, ... , x2_k2-1 for k2 categories          */

%macro dummy(dataset, var);

data a;
set &dataset.;
keep &var.;
run;

proc contents data=a noprint out=a;
run;

data _null;
set a;
call symput('p',_n_);
run;

%do k=1 %to %eval(&p.);

data null;
set a(firstobs=&k. obs=&k.);
call symput('var',trim(left(name)));
run;

proc means data=&dataset. noprint;
class &var.;
output out=ab;
run;

proc sort data=ab nodupkey;
by  &var.;
run;

data ab;
set ab;
where _type_>0;
call symput('levels',_n_-1);
run;

%do j=1 %to &levels.;
data b;
set ab (firstobs=&j. obs=&j.);
call symput("level&j.",&var.);
run;

%end;

%if &k.=1 %then %do;

data &dataset._new;
set &dataset.;
%do j=1 %to &levels.;
if &var.="&&level&j." then &var._&j.=1;
else &var._&j.=0;
%end;
run;
%end;

%else %do;
data &dataset._new;
set &dataset._new;
%do j=1 %to &levels.;
if &var.="&&level&j." then &var._&j.=1;
else &var._&j.=0;
%end;
run;
%end;
%end;

%mend dummy;