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Re: st: About taking log on zero values


From   Alfonso Sanchez-Penalver <alfonso.statalist@gmail.com>
To   "statalist@hsphsun2.harvard.edu" <statalist@hsphsun2.harvard.edu>
Subject   Re: st: About taking log on zero values
Date   Thu, 20 Feb 2014 11:10:53 -0500

Hi Marteen,

The Tobit or Heckman would be intermediate estimations to estimate the ln(sales) for the values where sales equals zero. You would then use replace ln(sales) with the predicted values of the Tobit of Heckman models for those values where sales equals zero, and use that variable as an explanatory variable in the model he wants to estimate. This is common practice when you need to use a wage rate in a model and you only have rates for those people who work.

Alfonso Sanchez-Penalver

> On Feb 20, 2014, at 10:48 AM, Maarten Buis <maartenlbuis@gmail.com> wrote:
> 
>> On Thu, Feb 20, 2014 at 4:16 PM, Alfonso Sánchez-Peñalver wrote:
>> In any case, if possible the best possible solution would be to estimate the values that ln(sales) would take for those zeros using either a Tobit or a Heckman sample selection model.
> 
> This might work if we were talking about an dependent variable (though
> in that case I would just use a glm with a log link). However, we are
> talking about an independent variable. What should happen with the 0s
> depends on the functional form of the relationship between sales (the
> independent variable, which Sebastian wants to log) and y (the
> dependent variable). A Tobit or a Heckman are not tools for
> determining such a functional form, and can thus not be a solution to
> this problem.
> 
> -- Maarten
> 
> ---------------------------------
> Maarten L. Buis
> WZB
> Reichpietschufer 50
> 10785 Berlin
> Germany
> 
> http://www.maartenbuis.nl
> ---------------------------------
> 
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