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Re: st: margins, eyex


From   Antoine Terracol <Antoine.Terracol@univ-paris1.fr>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: margins, eyex
Date   Sun, 23 Sep 2012 22:06:47 +0200

That's because when you regress ln(y) on ln(x), you assume a constant elasticity, i.e. a linear relationship between ln(x) and ln(y); estimated by the coefficient of ln(x). When you regress y on x, you assume a linear relationship between x and y. The estimated relationship between ln(x) and ln(y) will not be linear in that case; and the elasticity will thus vary according to the value of x.


tl;dr: -reg y x- and -reg ln(y ln(x)- do not make the same assumptions on the relationship between y and x

Antoine

On 23/09/12 20:59, albert Lee wrote:
Hi, I ran a simple OLS and invoked the margins, eyex(*) to calculate
the elasticities.  I try to replicate the elasticity estimates by
running the sample regression with logged dependent variable, and
independent variables.  I was surprised that the coefficient estimates
from the logged regression are not identical with the margins
estimates.  Initially, I thought the discrepancies are due to atmeans
and asobserved options with margins.  But I tried both options and
still cannot replicate elasticity estimates by the logged regression.
Could someone explain?

Thanks,

Albert.



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