Jay,
I would say "one idea," rather than "the idea." Even if the data
contain no points of high leverage (which may or may not exert
disproportionate influence), a transformation of an RHS variable may
remove nonlinearity in its contribution to the model. Sometimes a
transformation both reduces the leverage of high-leverage points and
removes nonlinearity.
David Hoaglin
On Wed, Mar 27, 2013 at 12:41 AM, JVerkuilen (Gmail)
<jvverkuilen@gmail.com> wrote:
>
> Anyway, the idea behind log-transforming an RHS variable would be to
> reduce high leverage points induced by a long right tailed
> distribution such as income, wage, or something like that. It poses no
> in principle problems but of course a log-transformed variable is not
> the same as the oroginal variable.
*
* For searches and help try:
* http://www.stata.com/help.cgi?search
* http://www.stata.com/support/faqs/resources/statalist-faq/
* http://www.ats.ucla.edu/stat/stata/
