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Re: st: When to use Log (1+x) Transformation?


From   "Song" <raravise@gmail.com>
To   <statalist@hsphsun2.harvard.edu>
Subject   Re: st: When to use Log (1+x) Transformation?
Date   Sun, 6 Apr 2008 11:53:26 -0500

Dear Marteen,

Thank you for the informaiton. I need to use log transfomation for both my dependent variable and independent variables. I cannot us glm, because I am estimating a simultaneous equation model by 3SLS (reg3). I know it is not recommended to use log(1+y) for a dependent variable because it is not clear how to recover the conditional expectatino E(Y/X) from E[(1+Y)/X]. However, I am not sure what is wrong with log(1+x) for an independent varible. Can you provide a little more details?

Thank you very much,
Reo.

----- Original Message ----- From: "Maarten buis" <maartenbuis@yahoo.co.uk>
To: <statalist@hsphsun2.harvard.edu>
Sent: Saturday, April 05, 2008 1:26 PM
Subject: Re: st: When to use Log (1+x) Transformation?



--- Song <raravise@gmail.com> wrote:
I need to use log transformation before regression analysis. Because
some of my variables contain 0, I need to use log (1+x) instead of
log (x), where x contains only positive values. My question is... Do
I need to use log (1+x) if x does not contain 0, but contains values
less than one? I think I can  use log (x) in this case.
This question comes up so every once in a while, and the answer is
always that you should not do the log(1+x) transformation at all. If
the variable is your dependent variable you can avoid doing that by
using -glm- with the -link(log)- option. If your variable is an
independent variable, the concern is linearity of the effect of that
variable, so you can work around that by entering it as a spline. See:
-help glm- and -help mkspline-.

Hope this helps,
Maarten

-----------------------------------------
Maarten L. Buis
Department of Social Research Methodology
Vrije Universiteit Amsterdam
Boelelaan 1081
1081 HV Amsterdam
The Netherlands

visiting address:
Buitenveldertselaan 3 (Metropolitan), room Z434

+31 20 5986715

http://home.fsw.vu.nl/m.buis/
-----------------------------------------


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