From what the picture(*) tells me, the dataset already contains a numeric variable ETHNIC. You need to get ruid of it before you can create a new character variable with the same name. Use a DROP= dataset option in your SET statement for this.
*) Never use pictures to provide data. Use a data step with datalines, posted in a code box, so we can easily recreate your dataset for testing, without having to guess variable attributes and raw content.
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