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RE: st: Log of nonpositive numbers


From   Gauri Khanna <gwkhanna@hotmail.com>
To   <statalist@hsphsun2.harvard.edu>
Subject   RE: st: Log of nonpositive numbers
Date   Sun, 30 Mar 2008 06:50:32 +0000




Just to add to the discussion, wealth is often used instead of income as the latter can suffer from underporting. Whereas wealth measures are asset based which are easier to determine (using yes or no questions. For example, do you own a car?). A piece on wealth (vs consumption expenditure) is explained in Filmer & Pritchett 2001, Estimating Wealth Effects without Expenditure Data or Tears" Demography, Vol 38 (or you can search in the World Bank's website)

Gauri

> Date: Sat, 29 Mar 2008 01:58:41 -0700
> From: daniel.schneider@stanford.edu
> To: statalist@hsphsun2.harvard.edu
> Subject: Re: st: Log of nonpositive numbers
>
> Income should not be negative. Wealth is not income. The studies that
> use something like this mostly use INCOME not WEALTH.
>
> The question here is why you are using both wealth and income. In many
> (but not all cases) income is included as a general control variable
> reflecting social status etc. In that case you would probably be fine by
> just using income and perhaps using log(income+1) for those few cases
> that have zero income. I bet income and wealth are highly correlated
> anyways.
>
>
>
> ucb_gal wrote:
>> Hi,
>>
>> I've seen this question asked a few other times, but I'm still a little unclear on what the considerations are in thinking this through.
>>
>> I'm running logistic regressions with the log of income and wealth as independent variables. I've seen this done often enough that I didn't really think twice about it. But then I realized that while I don't have a ton of cases with exact 0 values in either variable, I do have a number of cases with negative wealth. And all of these show up as missing now.
>>
>> Am I mistaken in thinking that I've seen studies that use the log of income as predictors??
>>
>> Thanks!
>>
>>
>>
>>
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