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# Re: st: AW: mfx-Elasticity for a dummy variable

 From A Loumiotis To statalist@hsphsun2.harvard.edu Subject Re: st: AW: mfx-Elasticity for a dummy variable Date Tue, 8 Jun 2010 14:27:45 +0300

```Yes I agree... although one can compute it at the mean point of T
which is different from 0 or 1.  But as I said in my first response
elasticities with respect to dummy variables have no meaningful
interpretation.

On Tue, Jun 8, 2010 at 2:18 PM, Martin Weiss <martin.weiss1@gmx.de> wrote:
>
> <>
>
> " ...will be the coefficient of the dummy
>  variable T divided by the dummy variable itself."
>
>
> I do not get this sentence. The dummy is either 0 or 1, as you said.
> Dividing by zero is not permissible, and dividing by one does not change
> anything, does it?
>
>
>
> HTH
> Martin
>
> -----Ursprüngliche Nachricht-----
> Von: owner-statalist@hsphsun2.harvard.edu
> [mailto:owner-statalist@hsphsun2.harvard.edu] Im Auftrag von A Loumiotis
> Gesendet: Dienstag, 8. Juni 2010 13:15
> An: statalist@hsphsun2.harvard.edu
> Betreff: Re: st: AW: mfx-Elasticity for a dummy variable
>
>  The elasticity of y with respect to the dummy variable in the way that
>  you have defined your regression will be the coefficient of the dummy
>  variable T divided by the dummy variable itself.
>
> On Tue, Jun 8, 2010 at 2:05 PM, A Loumiotis <antonis.loumiotis@gmail.com>
> wrote:
>> Nyasha,
>>
>> The elasticity of y with respect to the dummy variable in the way that
>> you have defined your regression will be the coefficient of the dummy
>> variable T times the dummy variable itself.  If you calculate it at
>> the mean point of T then it will be different from the coefficient of
>> the dummy variable.  If you calculate it at T=1, it will be the same.
>>
>> However elasticities with respect to dummy variables have no
>> meaningful interpretation because the dummy variable changes in a
>> discrete fashion (from 0 to 1).
>>
>> Antonis Loumiotis
>>
>> On Mon, Jun 7, 2010 at 6:24 PM, Nyasha Tirivayi <ntirivayi@gmail.com>
> wrote:
>>> Dear Martin
>>>
>>> Thanks for the code. Now the results are different. I was using the
>>> wrong code i.e mfx , dyex at(mean) instead of mfx compute,
>>> varlist(logweight) dyex at(mean).
>>>
>>> Regards
>>>
>>> Nyasha Tirivayi
>>> Maastricht University
>>>
>>>
>>>
>>> On Mon, Jun 7, 2010 at 9:16 AM, Martin Weiss <martin.weiss1@gmx.de>
> wrote:
>>>>
>>>> <>
>>>>
>>>> What is the difference of your example to this one - where the marginal
>>>> effects do seem to change:
>>>>
>>>>
>>>> *************
>>>> sysuse auto, clear
>>>> gen logprice=log(price)
>>>> gen logweight=log(weight)
>>>> reg logprice length logweight foreign
>>>> mfx compute, varlist(logweight) dydx at(mean)
>>>> mfx compute, varlist(logweight) eyex at(mean)
>>>> mfx compute, varlist(logweight) dyex at(mean)
>>>> mfx compute, varlist(logweight) eydx at(mean)
>>>> *************
>>>>
>>>>
>>>>
>>>> HTH
>>>> Martin
>>>>
>>>> -----Ursprüngliche Nachricht-----
>>>> Von: owner-statalist@hsphsun2.harvard.edu
>>>> [mailto:owner-statalist@hsphsun2.harvard.edu] Im Auftrag von Nyasha
> Tirivayi
>>>> Gesendet: Montag, 7. Juni 2010 02:50
>>>> An: statalist@hsphsun2.harvard.edu
>>>> Betreff: st: mfx-Elasticity for a dummy variable
>>>>
>>>> Dear All
>>>>
>>>> I am trying to estimate elasticity for a dummy explanatory variable in
>>>> the following model
>>>>
>>>> ln(y) = a + b ln(x) + T + D Z
>>>>
>>>>
>>>>
>>>> I am interested in calculating the elasticity for T a dummy variable
>>>> for a "treatment". What is the formula in stata? Is it mfx,dy/dx or
>>>> mfx,dyex?
>>>>
>>>>
>>>>
>>>> I have done mfx,dyex and the result still remains the coefficient for
>>>> T. Could it be that simple? Or there is another way ?
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> Nyasha Tirivayi
>>>>
>>>> Maastricht University
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>>
>
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```