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Re: st: AW: mfx-Elasticity for a dummy variable
From
Nyasha Tirivayi <[email protected]>
To
[email protected]
Subject
Re: st: AW: mfx-Elasticity for a dummy variable
Date
Thu, 10 Jun 2010 18:09:13 +0200
Dear Antonis
Yes you have the model correct. However, you earlier said the
elasticity was c*T instead of c/T. Which is it then?
Kindly advise
Regards
Nyasha Tirivayi
Maastricht University
On Thu, Jun 10, 2010 at 11:11 AM, A Loumiotis
<[email protected]> wrote:
> your model is (correct me if i'm wrong):
>
> ln(y) = a + b ln(x) + c T + dZ + error
>
> The elasticity of y with respect to T is
> (dy/y)/(dT/T)=dln(y)/(dT/T)=(dln(y)/dT)/T=c/T.
>
> So, the elasticity of y with respect to T does not depend on the means
> of ln(x) and ln(y). As I said in my previous reply it is equal to the
> coefficient of the dummy variable T divided by T (= c / T). So the
> elasticity will be equal to "c" only if you calculate it at T=1 and
> not at the mean of T. It is your call but you should consider the
> drawbacks of computing elasticities with respect to dummy(discrete)
> variables.
>
> Antonis
>
> On Wed, Jun 9, 2010 at 6:15 PM, Nyasha Tirivayi <[email protected]> wrote:
>> Dear Antonis and Martin
>>
>> Thanks for your reply. If you recall my model is as follows:
>>
>> ln(y) = a + b ln(x) + T + D Z
>>
>> I intend to calculate elasticity for T at T=1 and at means of ln(x)
>> and ln(Y). And if I do that the elasticity is the same as the
>> coefficient of T.
>>
>> Should I proceed with that as the answer?
>>
>> Kindly advise
>>
>> Nyasha Tirivayi
>> Maastricht University
>>
>> On Tue, Jun 8, 2010 at 1:27 PM, A Loumiotis <[email protected]> wrote:
>>> 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 <[email protected]> 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: [email protected]
>>>> [mailto:[email protected]] Im Auftrag von A Loumiotis
>>>> Gesendet: Dienstag, 8. Juni 2010 13:15
>>>> An: [email protected]
>>>> 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 <[email protected]>
>>>> 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 <[email protected]>
>>>> 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 <[email protected]>
>>>> 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: [email protected]
>>>>>>> [mailto:[email protected]] Im Auftrag von Nyasha
>>>> Tirivayi
>>>>>>> Gesendet: Montag, 7. Juni 2010 02:50
>>>>>>> An: [email protected]
>>>>>>> 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 ?
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> Kindly advise
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> Nyasha Tirivayi
>>>>>>>
>>>>>>> Maastricht University
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>
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