st: RE: Spline Regressions and Log-Log Models

["Nick Cox" <n.j.cox@durham.ac.uk>]

I know of no reason why you should not work with splines here. In work
on loosely similar problems with Earth and environmental science data I
would feel free to use splines based on logged variables. The splines
don't know where the variables have been. 

Nick 
n.j.cox@durham.ac.uk 

Thad Daniel Calabrese

I've been modeling the relationship between an organization's income and
its accumulated wealth. The existing literature has a fairly standard
log-log model with income as the DV and wealth as one of the IVs. All
variables in the literature are logged.

When I log my wealth variable and graph it against the log of income,
the variable's linearity is certainly improved, but it is obviously not
perfectly straight (nor did I expect it to be).

The question I have is this: could I attempt to improve the model fit
using spline regression? I've only seen splines used on non-transformed
(but normalized) independent variables. I assume there must be a reason
for that and so it concerns me to try with transformed data.

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