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Research Letter

Taking logarithm when the independent variable contains zeros in regression analysis: a new approach

Donald Liena Department of Economics, College of Business, University of Texas, San Antonio, TX, USACorrespondence[email protected]
,
Yue Hub Education Analytics, Madison, WI, USA
&
Long Liuc Department of Economics, College of Business, Florida Atlantic University, Boca Raton, FL, USA
Published online: 09 Nov 2023

References

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  • Bellégo, C., D. Benatia, and L. Pape 2022. Dealing with Logs and Zeros in Regression Models. arXiv working paper, arXiv:2203.11820.
  • Bellemare, M. F., and C. J. Wichman. 2020. “Elasticities and the Inverse Hyperbolic Sine Transformation.” Oxford Bulletin of Economics and Statistics 82 (1): 50–61. https://doi.org/10.1111/obes.12325.
  • Burbidge, J. B., L. Magee, and A. L. Robb. 1988. “Alternative Transformations to Handle Extreme Values of the Dependent Variable.” Journal of the American Statistical Association 83 (401): 123–127. https://doi.org/10.1080/01621459.1988.10478575.
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  • Ekwaru, J. P., and P. J. Veugelers. 2018. “The Overlooked Importance of Constants Added in Log Transformation of Independent Variables with Zero Values: A Proposed Approach for Determining an Optimal Constant.” Statistics in Biopharmaceutical Research 10 (1): 26–29. https://doi.org/10.1080/19466315.2017.1369900.
  • Johnson, N. L. 1949. “Systems of Frequency Curves Generated by Methods of Translation.” Biometrika 36 (1/2): 149–176. https://doi.org/10.1093/biomet/36.1-2.149.
  • Meyer, B. D., W. K. Viscusi, and D. Durbin. 1995. “Workers’ Compensation and Injury Duration: Evidence from a Natural Experiment.” American Economic Review 85:322–340. http://www.jstor.org/stable/2118177.
  • Mullahy, J., and E. C. Norton 2022. Why Transform Y? A Critical Assessment of Dependent-Variable Transformations in Regression Models for Skewed and Sometimes-Zero Outcomes. NBER Working Paper 30735.
  • Norton, E. C. 2022. “The Inverse Hyperbolic Sine Transformation and Retransformed Marginal Effects.” The Stata Journal 22 (3): 702–712. https://doi.org/10.1177/1536867X221124553.
  • Tukey, J. W. 1977. Exploratory Data Analysis. 1st ed. Massachusetts: Addison-Wesley.

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