Dear Laszlo,
thanks for your remark. The potential misleading arises because the use of
natural log is the reference in econometrics textbook. However, as you
suggested, a thorough check of this requirement should be made, in order to
avoid bewildering results.
Kind Regards,
Carlo
-----Messaggio originale-----
Da: [email protected]
[mailto:[email protected]] Per conto di dr kardos laszlo
Inviato: martedì 17 marzo 2009 8.34
A: [email protected]
Oggetto: Re: st: R: linear regression question
unless i got something wrong,
the relative change in y associated with a unit change in x in such
models works out as antilog(beta) on the appropriate base. in this case,
because galina explicitly mentioned natural log, and using carlo's
example, it is exp(.2) = 1.2214, a 22.14% increase. try with base-10 and
you will get something completely different.
the approximation 100*beta% works better and better as beta approaches
zero (and as the log-transformation base approaches 1, but that's not
typical in practice). in the stata journal article referred to below,
beta=.0741516 and exp(beta)=1.07697, arguably close to 1.07415. in other
cases, the difference might be to an extent you do not want to ignore.
laszlo
Galina Hayes wrote:
> Thanks very much everyone, very helpful.
> Galina
> ----- Original Message -----
> From: "Maarten buis" <[email protected]>
> To: [email protected]
> Sent: Sunday, March 15, 2009 11:48:52 AM GMT -05:00 US/Canada Eastern
> Subject: Re: st: R: linear regression question
>
>
> --- On Sun, 15/3/09, Carlo Lazzaro wrote:
>
>> your thread seems to refer to a log-linear model, where
>> only the dependent variable (i.e., Y) is log-transformed.
>>
>> In a log-linear model, a unit-change in the independent
>> variable X (i.e., DeltaX=1)is associated with a 100*Beta%
>> change in Y.
>>
>
> This is one possible way of interpreting such a model. An
> alternative way is discussed in: Roger Newson (2003) "Stata
> Tip 1: The eform() option with regress" The Stata Journal,
> 3(4): 445.
> http://www.stata-journal.com/article.html?article=st0054
>
> Both interpretations are correct, they are just different
> ways of looking at the same model.
>
> Hope this helps,
> Maarten
>
> -----------------------------------------
> Maarten L. Buis
> Institut fuer Soziologie
> Universitaet Tuebingen
> Wilhelmstrasse 36
> 72074 Tuebingen
> Germany
>
> http://home.fsw.vu.nl/m.buis/
> -----------------------------------------
>
>
>
>
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