I am familiar with the Psych. Methods article Dave mentioned (in fact, I referred my colleague to it, it is a gem), and Dennis' points pretty well matched mine with respect to why not to dichotomize.  My colleague's query was, however, "if you are going to dichotomize a continuous subject variable and compare the resulting two groups on a second continuous variable, even though that is not generally a good idea, is it more useful to use a median split (upper half vs lower half) or to compare the tails (such as upper third versus lower third)?"  I suggested to my colleague that this would depend, in part, on the form of the relationship between the two continuous variables (not necessarily strictly linear), and reminded him that throwing out the middle of the distribution would reduce N and thus might reduce power too.  My colleague confessed that he was fishing for a citation to justify having done something that I told him earlier was not a good thing to do.  ;-)
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There is an excellent paper on median splits by MacCallum et al. in Psychological Methods, 2002, 7, 19-40.

There is also a equally good paper by Julie Irwin and Gary McClelland in a marketing journal. It either just came out or it is in press. (I couldn't find it with PsycInfo, so it may not be out yet.)

Both papers agree with Karl's advice. "When you think about a median split, DON'T."

Dave Howell

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