I am writing a master's thesis on crowdfunding. For this research I set N independent variables and 3 DVs. The reason for doing so is that I want to explore the phenomenon from the aspects of all 3 DVs, as they are giving me different insights, and to crosscheck the results from all 3 models. Here is a bit more details on the three DVs and the models:

  1. Success [dummy] - I will use logistic regression for that.

  2. Success Ratio - Ratio variable [0-N] - I use Linear Regression and to linearize the model I use the following transformations:
    $\ln(x+1)$ to keep the zeroes, as the distributions are heavily skewed. ==> $\ln(y+1)=b_0+\ln(x_1+1)b_1$..., etc.

  3. N_Backers - Count variable [0-N] - I plan to use a Poisson GLM with log function, but it might be reasonable as well to be inline with DV2 and to use Linear Regression with transformed variables $\ln(y+1)=b_0+\ln(x_1+1)b_1$..., etc.

Question: What is your advice on these methods, do they sound reasonable? Further, should I use linear or Poisson for the 3rd DV? My concerns are that I am not sure how the results will be interpreted using all different models. Probably the use of consistent models is the right approach.


1 Answer 1


Transformation on the dependent variables is rarely advisable, its much better to use a GLM. So I would consider the poisson model for the 3rd DV, but be sure to check for overdispersion if you use it.

According to your clarifications, the second DV has over 50% of 0 values. I've modeled symilar response variables using a conditional strategy: You could fit a binomial model to classify as zero/non zero and then fit a gamma model to the observations classified as non zero by the first model.

  • $\begingroup$ Thanks for the advice Aghila. The second DV is a ratio variable, combined of 2 other variables. It might take positive values from 0-N, also decimals, where 0>=X<1 indicates unsucecssful project (corespoinding to the 1st DV) and 1 and above indicates successful project. So I checked one similar research and they guy was using ln transformation for dv and iv, thats why my idea was to use ln tranform variables. $\endgroup$ Jul 21, 2013 at 13:55
  • $\begingroup$ Its hard to make a recomendation without knowing more about the process generating this variable and its actual distribution. Can you provide more details? Also, what is the reason for transforming all the independent variables? $\endgroup$
    – Aghila
    Jul 21, 2013 at 16:39
  • $\begingroup$ The DV indicates the success ratio - Funded Amount/Funding Goal. Values below 1 indicate unsuccessful funding, whereas 1 and above, successful funding. The sample is quite ample 6000+ The distribution is rougly like this: Range [0-600+]. About 50%+ are 0 values , 40%+ values [0-5], and a very small percentage of the values are higher than 5, so the picture is quite skewed. There is a higly distinctive 2 peak distribution - projects with 0 success ratio, and projects with 1-1.5 with sharp decaying tails after the 2 peaks. $\endgroup$ Jul 21, 2013 at 17:23
  • $\begingroup$ Reasons for Transformation of the IV: Interpret the model as elasticities, Not sure about: Linerilize the IV; deal with outliers $\endgroup$ Jul 21, 2013 at 17:23
  • $\begingroup$ Edited my answer with your new information $\endgroup$
    – Aghila
    Jul 21, 2013 at 17:50

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