Using The Log Where It Does Not

Econometrical analysis is heart of any economic research. It won’t be fare if I do not give a glimpse about Econometrics; basically, econometrics is a special form of statistical analysis completely dedicated to the growth of economic research and in some cases it is distinguishable from standard statistical mathematics. The regime of econometrics is vast and new approaches are adding on day by day. Econometrics have the capability to give us subtle but meaningful insights through its computing and analytical power.
Sometimes obscuring models in some research activities make me anxious and pioneered me to think deeply about modeling issues. While attending a national seminar at a university I noticed a person presenting an econometric model with some indescribable move by making the natural logarithm operator common for all explanatory variables. Basically his model seems to be functionally miss-specified, i.e., the components of the model were erroneously presented. In this context, I am trying to reflect the dummies under the umbrella of natural logarithm.
Let’s kick off with the need for natural logs in a regression model. Natural logs are often used to show constant percentage regression models. For instance, with log wage dependent variable and education as
log(wage) = b0 + b1educ + u
a regressor we can say that wage increases by a constant percentage with every additional year of education. In addition, natural log can be used to obtain constant elasticity and semi elasticity regression model. In the above equation 100.b1 refers to as semi-elasticity of y with respect to x. if the education variable was log (educ), then we could have said b1 is elasticity of y with respect to x.
Share Now
Other Blogs
ENVIRONMENTAL SUSTAINABILITY UNDER CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR Policy:There is no single universal definition of CSR. It is an age-old concept that
Scientific Social Responsibility
Transfer of Knowledge to society: Knowledge is an important resource for the sustenance of our
FCRA And Its Effect On Indian NGOs – Operational Challenges And Changes Required For Grassroots Organizations
The contribution of NGOs/VOs towards the inclusive development goals of India has been documented meticulously
Why it is imperative to educate women
I just got the incredible chance to join the workforce of Devinsights. My first reaction
Evaluation Methods and Techniques with Children as Respondents
The world is concerned about children’s issues and there is an increasing interest and emphasis
Data Analysis as a Salient Step in the Process of Monitoring and Evaluation
Data analysis is one of the most crucial stage in the field of monitoring and
Rules that cannot be ignored about experimental evaluation design
Experimental designs are often considered the ‘gold standard’ of research designs because of the rigorous
3 Social Research Methods That You Need to Know Before Starting Your Career as Social Researcher
Author: Manika Tomar, Manager – MLE, DevInsights Choosing social research as a viable career has
Public Health Research in India
Public health research has gained increasing importance in India’s national health policy and public health
Theory of Change in Evaluation & Monitoring, Research
Theory of change is both a process and a product. At its simplest, theory of
Quasi Experimental Research, Design
The prefix ‘Quasi’ means resembling in Latin. Quasi experimental simply means that it is almost
International Women’s Day 2021 – Contest
As per UNWomen.org report, 2.7 billion women are legally restricted from having the same choice