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I have thousands of observations (individuals) and earnings data for
each of them covering 53 years, in the form earnings1951,
earnings1952,...,earnings2003.
I'd like to convert those nominal earnings to 2003 dollars.
I have a price index variable called cpi with 53 values * for each of
the 53 years, where the first value is equal to cpi1951/cpi2003, the
second is cpi1952/cpi2003 etc. The remaing values are missing (because I
copied a column created in excel).
I'm trying to write a mini program that'll compute real earnings (in
2003 dollars) for all individuals the following way:
gen j=0
. program define real
1. local i=1951
2. while (`i'<=2003) {
3. replace j=`i'-1950
4. gen realearnings`i'=earnings`i'/cpi[`j',1]
5. local i=`i'+1
6. }
7. end
But the results I get are incorrect. To check why, I try:
gen realearnings1951=earnings1951/cpi[1,1]
and get an error message saying:
cpi not found
r(111);
What is the correct way of doing this computation?
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and Rodrigo Alfaro replied
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You refer cpi[] as a matrix but you told us it is a variable.
I am not complete clear about your data... but you can
try something like
forvalues i=1951/2003 {
local k=`i'-1950
local factor = cpi in `k'
gen realearnings`i'=earnings`i'/`factor'
}
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Proceeding on Rodrigo's assumption, namely that
-cpi- is a variable with non-missing values in 1/53 for years 1951/2003
then his code can be fixed and compressed to
forval i = 1951/2003 {
local k = `i' - 1950
gen realearnings`i' = earnings`i' / cpi[`k']
}
and even to
forval i = 1951/2003 {
gen realearnings`i' = earnings`i' / cpi[`=`i' - 50']
}
