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From |
"Austin Nichols" <austinnichols@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: log of zero |

Date |
Wed, 2 Jul 2008 13:06:49 -0400 |

Viktor-- If you regard the RHS zeros as true values, measured without error, they cannot be used to estimate elasticities. Adding an arbitrary small positive quantity guarantees arbitrary results of small practical utility. If you regard the RHS zeros as actually positive but measured with error, then you may be able to write down a GMM IV model where you predict the RHS value to be some strictly positive value using excluded instruments. You would have to program this yourself, with reference to -ivreg2- and -ivpois- on SSC or for a different approach see http://stata.com/merror/ for starters. Alternatively you could multiply impute the zeros (see SJ 8(1):49-67 and -findit mim-) which does not require programming a new estimator, but does require getting up to speed on multiple imputation. A third approach is to regress ln(Y) on X and then compute d\hat{ln(Y)}/dX * X manually for each obs and then average across them, but note you will still effectively be excluding obs with X=0 from the calculations unless you modify your definition of elasticity to be not a point elasticity but rather elasticities of discrete changes. On the whole, you may be better off simply excluding obs with ln(0) on the RHS, since that probably will not introduce bias (selection on X is often OK, so if all zeros are in fact less than the smallest observed positive value in the data, you are probably not introducing bias by excluding those obs) and requires no additional programming. On Wed, Jul 2, 2008 at 7:30 AM, Maarten buis <maartenbuis@yahoo.co.uk> wrote: > --- Viktor Slavtchev <slavtchev@econ.mpg.de> wrote: >> > > I want to estimate production function in logs in order to >> > > interpret the coefficients in terms of elasticities. one of the >> > > RHS variables has a lot of zero value. > > --- maarten Buis wrote: >> > I think you are refering to using -glm- with the log link > > --- Nick Cox <n.j.cox@durham.ac.uk> wrote: >> As I understand it, -glm, link(log)-, although otherwise white magic >> of the best Dumbledore kind, can do nothing to help with zeros in a >> predictor that you want to log. * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**st: Mlogit and gllamm***From:*"Howrey, Bret T." <bthowrey@UTMB.EDU>

**References**:**RE: st: log of zero***From:*"Nick Cox" <n.j.cox@durham.ac.uk>

**RE: st: log of zero***From:*Maarten buis <maartenbuis@yahoo.co.uk>

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