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# Re: st: OLS assumptions not met: transformation, gls, or glm as solutions?

 From "Laura R." To statalist@hsphsun2.harvard.edu Subject Re: st: OLS assumptions not met: transformation, gls, or glm as solutions? Date Mon, 17 Dec 2012 15:29:14 +0100

```Thank you very much for your help so far.

Please let me reply one by one.

@ Carlo: I conducted your example and with my data it seems the same,
the -robust- option does not seem to change the graphical pictures or
the tests (-estat hettest-,  -iqr-) much. So the robust option has to
be visible in the graphics and the tests, that it induced
homoskedasticity?

@ Nick:
As to the equality of variances between the cases from the 2 surveys,
a referee seems concerned about inferences one can make from the
descriptive statistics. Therefore, I would like to use -sdtest- to see
whether variances are the same in the two samples.
And for the regression, I think that adding the year-dummy would be
enough to account for it?

The variances of the regression residuals are another thing, this is
for model validation. Yes, there I plotted the residuals, and the
variances seem to become larger as the dep. var. becomes larger,
especially the lower bound (with negative values) changes.

@ Maarten:
So you would not worry about heteroskedasticity or the distribution of
errors. What would you write in the paper then? "There is
heteroskedasticity and non-normal error distribution, but I still use
OLS because ...?" I am very curious, because I would like to keep the
OLS

@ Maarten & David:
About linearity: as independent variables, I mainly have categorical
variables. So - scatter y x- or -graph matrix y x x- does not help
much, because the cases are only on the lines for 0 and 1. How can I
see whether I have a linear relationship between y and x, if x is
categorical?

@ David:
Yes, I think about transformation, and will read again about
interpretation. Still, just having minutes to interpret would be
easier, also for readers which are not so familiar with
transformation. Also, I am not sure whether OLS with transformed
dependent variable, or -glm- without transformed variable would be
better.

Laura
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