Dear STATA Listers,
When running a Tobit model, is there any particular
reason not to take log on the dep. Var? I see some
papers that use Tobit model without taking log on the
dep. variable (even for variables with a large extent
of variability such as health expenditure). On the
other hand, what I read from the Cameron and Trivedi�s
book that the underlying distributions in Tobit can be
log-normal since normality is a key assumption here.
Could any body please tell me if there is any problem
to take log in the dep. var in Tobit.
I am trying to estimate a travel demand equation and I
am taking log of the dependent variable which is a
proportion (number of trips made/number of people). I
have a lot of zero values for the proportions since in
many cases no trips have been made. I am adding one to
all zero observations and since the log of one is
zero, I am using the lower censoring limit at zero. Am
I doing it right? Thanks for your help in advance.
Pallab
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