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st: logit transformation of RHS variable


From   Raymond Lim <[email protected]>
To   [email protected]
Subject   st: logit transformation of RHS variable
Date   Wed, 4 Jan 2012 18:21:30 -0500

Hello Statalisters,
I have an independent variable that I believe that needs to be
transformed because it's bounded between 0 and 1, and it's easier to
go from 0 to .10 than say .80 to .90. My question is, can I use a
logit transformation on this RHS variable (new_x = x / (1 - x)? Or are
logits usually for LHS variables only?

Some alternatives may be
1. Add a quadratic term, but this doesn't get the S-shape representing
"easier to go from 0 to .10; harder to go from .80 to .90"
2. Add a lag term to control for value in the previous period (yes,
this is panel data).

Thanks!
-Raymond
---
Raymond Lim
Research Coordinator
Columbia Business School - Finance & Economics Division
[email protected]
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