# Re: st: AW: AW: Creating a variable taking the value of elasticity

 From Dorothy Bridges To statalist@hsphsun2.harvard.edu Subject Re: st: AW: AW: Creating a variable taking the value of elasticity Date Tue, 8 Sep 2009 11:10:17 -0400

```Thanks so much, everyone, that answers my question.  (And thanks Roger
for pointing me to the helpful package).  I have one last question: I
am trying to understand the "elasticity" of a health indicator with
respect to GDP (that is, how does a marginal increase in GDP affect
the health indicator?).  If I regress ln(healthindicator) on ln(gdp),
is the coefficient on ln(gdp) an appropriate way of measuring this
elasticity?  I realize this is more of an econometrics question than a
Stata question, but everyone has been so helpful I thought I'd might

Thanks again,
Dorothy

On Tue, Sep 8, 2009 at 10:52 AM, Austin Nichols<austinnichols@gmail.com> wrote:
> Dorothy Bridges<dbstata@gmail.com>:
> The linear model and the log-log model make very different assumptions
> about the data-generating process, so you should not expect to get the
> same estimates from them.  -mfx- after a linear model in particular
> will give approximate estimates that are very questionable--note that
> if the true model is
> y=Xb+e
> then the elasticity of y with respect to x (a variable, or column of
> X) will vary as x varies.
>
> On Tue, Sep 8, 2009 at 10:32 AM, Dorothy Bridges<dbstata@gmail.com> wrote:
>   I still
>> don't see, then, how mfx, eyex gives me a value different than the
>> coefficient on lnx in regress lny lnx.  Thanks again for all your
>> thoughts.
>>
>>
>> On Tue, Sep 8, 2009 at 10:20 AM, Maarten buis<maartenbuis@yahoo.co.uk> wrote:
>>> --- On Tue, 8/9/09, Dorothy Bridges wrote:
>>>> But what I don't understand is: the second method
>>>> (using mfx, eyex) gives me a different value than
>>>> the first method (storing the coefficient on x
>>>> from *regress lny lnx*).  Why?
>
> *
> *   For searches and help try:
> *   http://www.stata.com/help.cgi?search
> *   http://www.stata.com/support/statalist/faq
> *   http://www.ats.ucla.edu/stat/stata/
>

*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/
```