Questions tagged [elasticity]

In economics, a measure of the sensitivity or responsiveness of a variable corresponding to a change in another variable. Common applications in empirical research include price or income elasticity of demand. For example, what is the percent change in quantity demanded for gasoline when price is increased by 1%?

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Can the presence of simultaneous causality depend on the level of data aggregation?

I am trying to calculate price elasticity for one product. I have panel data - the original data consists of every individual sales transaction for each store over three years. A common issue in ...
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Cross-price elasticity of continuous products

The standard cross-price elasticity is the change in the quantity demanded for product A when the price of B changes. It can be modeled (assuming linearity, WLOG), as $$ q_A = \beta_0 + \beta_1 p_A + \...
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How does scaling the dependent variable affect the coefficients and more?

Consider the regression model visit_t=β_1+β_2log⁡(pub_t)+β_3 price_t+β_4 win_t+β_5 temp_t+ε_t where visit is measured in 1,000s. What happens to the coefficient beta 1, beta 2, the sum of squared ...
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Finding Elasticity of Discount with Consumers

I was wondering what the best method to go about this would be. I have one year's worth of data and its related to air-travel. So I have ticket fares, passengers sent, discount applied on each ticket ...
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Multicollinearity in a demand system

I have a question regarding a paper I am currently reading, which can be found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3819959. The authors mainly rely on cross-sectional price data ...
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How do I interpret price elasticity when using state specific dummies and price, dummy interaction

I have price volume data for 3 states for which I want to calculate price elasticity for each state. The model has the following setup: $$ \ln(Y)=A_1+ A_2\ln(P) +A_3D_1 +A_4D_2+ A_5\ln(P)D_1 +A_6\ln(P)...
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Modeling decreasing price elasticity of a good

I am attempting to model the decreasing price elasticity/response for a good. I need to control for place and time features and available alternatives. Besides this, I also need to add time and ...
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Elasticities of multiple explanatory variables in multinomial logit model

I have estimated a multinomial logit model with multiple explanatory variables and I'm searching for the right formula to get the elasticities (or quasi-elasticities) for each explanatory variable. ...
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Elasticity of a 0-1-2 dummy variable in a log-log model

We know from the following sources, "Halvorsen, R. and Palmquist, P., The Interpretation of Dummy Variables in Semilogarithmic Equations, American Economic Review, Vol. 70, 1980, pp. 474-475.&...
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xgboost demand model with a smooth effect for the price variable

Question The question is: how to smooth out kinks in individual demand curves in a GBDT model without underfitting on the price variable? Background We have some GBDTs demand models already in place (...
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How to setup data properly for regression analysis to calculate price elasticity?

I am working on a project to try understand Linear Regression a bit deeper (they say experimenting is key and getting lost is part of the process) :( In this project, let's assume I have a watch shop. ...
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If 1% increase in X = .28% decrease in Y, does a 1% decrease in X = a .28% increase in Y?

I performed a log-log regression and have a negative regression coefficient. I'm interpreting my results to indicate that a 1% increase in X is associated with a .28% decrease in Y. However, for ...
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constant model elasticity demand

I need to be corrected if i have something wrong : the elasticity of the demand is calculated : dq/dp if q is the quantity and p the price so to calculate it i take two prices p1 and p2, if i have ...
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Log-Log regression not giving me elasticity [duplicate]

Ive got a regression in the form log(y) = a +b1x1 + b2x1^2 + b3x2 + b4x3 + b5* log(x4). I've interpreted my coefficients as they should be interpreted.I figured out the quadratic and e^b3 and e^b4 are ...
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Interpreting coefficients in log-log model with dummy for elasticity

I'm running an analysis of two products, X and Y, and I'm particularly interested in understanding the elasticities. However, I'm struggling to interpret the results. I'm using a log-log model, and in ...
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Market Mix Modeling using Random Forest

I am trying to build a random forest-based market mix model, wherein I want to calculate the contribution of each of my X variables towards the target. Typical MMM problem statement, but here am not ...
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Elasticity of negative binomial regression?

How to find the elasticity of a negative binomial regression when the independent variables are numeric, categorical, or dummy variables? Edit: For example, ...
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Price optimization algorithms

I am working on an price optimization problem for a Real Estate company. Basically, we'd like to optimize their rental price to maximize revenue on their properties. I have submarket level data such ...
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Price elasticity: The comnment in the solution is not correct?

The comment in the solution says : We display all elasticities of purchase probability on the same plot. We observe that the Career-focused segment are the least elastic when compared to the rest. So, ...
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how to model price elasticity

I'm trying to model price elasticity based on price changes and I'm wondering what is the best way to do it. My data is at at the individual customer level and there's a 0/1 indicator for whether they ...
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Finding elasticity coefficients dummy variables

Lnyt=3.493+0.231xt-0.13Dtxt+1.024D2-0.541D3+t The data is quarterly and D2 and D3 are significant seasonal dummy variables I included. Additionally, Dtxt is the slope interaction dummy ...
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When using OLS on $\ln(y) = \beta_1 \ln(x) + \epsilon$, is $\beta_1$ the elasticity of $E[y\vert x]$, or the $y$ in the data (or both)?

Specifically, suppose we are estimating $$ \ln(y)=\beta_1\ln(x) + \epsilon $$ I understand that $\beta_1 = \frac{\partial \ln(y)}{\partial \ln(x)}$ which is the elasticity of $y$ with respect to $x$ ...
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ARMA(-X) model with exogenous covariates interpretation

Let us assume that $Y_t$ can be described with an ARMAX process, including an exogenous covariate $X_t$, of the following form: \begin{equation} log(Y_t)=\phi_1log(Y_{t-1})+\phi_{12}log(Y_{t-12})+\...
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Regression Elasticities in multiple regression with continuous and dummy variables

So let's say I have a multiple regression as such: Y = constant + a1X1 + a2X2 + a3X3 Here ac is the coeffcient corresponding to the Xc Y is a normal variable constant is a non-zero constant X1 is ...
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Relating Two Derivatives (and Elasticities) of a Log-Log Regression

Consider a standard "log-log" linear regression model like this: $\log(y_i) = \log(a_i + b_i)\delta + \epsilon_i$, where $y$ is the dependent variable, $a$ and $b$ are two independent variables, and ...
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Data level aggregation for price elasticity

I have just started working on price elasticity and I have some fundamental question. Question 1: I have daily price and sales data for a product, now if I want to calculate the price elasticity ...
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How to interpret the result from local sensitivity analysis?

I am currently doing local sensitivity analysis on a model that has 40 input parameters. I varied the base case value by 10% within the range of [-1, 1]. While doing so the average change (here, I ...
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Price elasticity for n data points

So let's say I have 100 data points which contains the price and sales of a product. Just to start I assume that the relationship is of the form Q = a - b*P where P ...
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Different price elasticity results

According to this article, calculating elasticity of demand for different models is: I generate data for 5% reduction in prices with a corresponding 10% increasing in sales: price elasticity = (+10%/-...
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Modelling dynamic price elasticity with bsts [closed]

I have approximately 2000 daily data which contains total daily sales and median price of sales for a particular product. I read the paper but the level of bayseian math is too high for me but from ...
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How to interpret interaction in Log Log models

I have the following model, and I am not sure how to interpret the elasticity of the interaction term (log-log coefficients): Log(member) = 3.61 + 0.52 Log(Poor) - 0.26 Log(Sick) + 0.04 (Log(poor) * ...
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Elasticity Value for Log-Log and Level-Level Model

For a data if I calculate Elasticity using 1) log-log model with Elasticity = Beta and 2) Calculate elasticity in Level-Level Model with elasticity = beta *(X/Y) should the resultant value of ...
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Price elasticity vs Discount Elasticity

I have a case where I do not have many regular prices, but I have many discounts (different kind) which last a different number of days. Is there something like discount elasticity and how to adjust ...
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Price Elasticity model for products with volume based pricing

I have few product categories eg prod1 prod2. Each category have similar products. So prod1 has 3 similar products with slight difference in features and prod2 has 5 products with slight differences. ...
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Log-log regression where variables are in terms of growth rate

I would like to estimate elasticity of exchange rate on export. The specification takes the following form: $$Exp=\alpha+\beta_0REER+\beta_1GDP^{p}+\epsilon$$ where, $Exp$ is export growth calculated ...
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Estimating elasticity using different regression models

My question is how to estimate elasticity based on a Probit model. I know the following formulas are used to estimate elasticity based on OLS (1) and logit (2) models (Ewing & Cervero, 2001): (1)...
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In R, How can I calculate the elasticity of Y with respect to X, when Y is binary?

I have a dataset that I am doing in R and I need to calculate elasticities in it. To simplify my model, I have Y = XB + u, and I need to find the elasticity of Y with respect to X. My investigation ...
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Price Elasticity Estimation with a non-linear price schedule

How do I estimate price elasticity in a non-linear price setting? Non-linear prices are seen in utilities (electricity, water etc.) where the price per unit is determined by quantity purchased. So a ...
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Price elasticity in logistic regression with log price

I'm estimating demand and calculating price elasticity using logistic regression. In logistic regression with level price, elasticity is $$ \alpha*price*(1-share)$$ while if one uses log of price, ...
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Price elasticity for mortgages

this is my first question and I hope I get everything right. The problem I have to solve is the following: a bank is offering its customers "pre-validated" mortgages of up to a certain amount (for ...
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rough elasticity estimates of homogeneous products

Let us say I am using a log log model to estimate the own price elasticity of a product given the unit demand data for different prices. I think this is acceptable as it is done by many practicioners. ...
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Calculate price elasticity from a history of sales data

I'm looking at sales data with sales at different prices over time, I can't figure out a good approach to getting the: 'If we increase our prices by 1% how much will our demand change by? ' the data ...
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Interpretation - after transforming slope to elasticity

Basically, my question is, after I transform the slope into elasticity by using the standard formula How do I interpret the number I get? Say, I got -0.21. Should I interpret it as -0.21%, or -20% ?...
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How can I approximate the standard error for an elasticity with limited information?

I want to estimate/approximate the standard error of an elasticity of Y with respect to X: (dy/dx)*(x/y) Let's say I have the following data: The mean of Y and its standard deviation The mean of X ...
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Obtain elasticity from model predictions

Say we have estimated a model: demand = a + b * price; where b represents the estimated point elasticity (assuming a log-log model). Can we use this model to predict the demand in a new scenario ...
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Extrapolate historical elasticities

Suppose I have: Point estimates of price elasticity of demand for a given good Point estimates of income elasticity of demand for a given good Point estimates of output for a given good Point ...
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Can I use cross elasticity of demand for time series data?

I would like to determine, whether two products are complementary. I have one year of data (day by day), where I have prices and demands for both products. Can I use cross elasticity of demand? I ...
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price elasticity and time series modelling

Formulas like this taken from here: ...
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modeling demand/elasticity for products with potential/occasional zero demand

Looking at the methodology which uses this log model: $Log{Demand_A} = \beta_0+ \beta_1logPrice_A + \beta_2logPrice_B + \beta_3Promo_1 + \beta_4Promo_2 + \beta_5logPrice_A*Promo_1 + \beta_6*...
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Are regression estimates still reliable despite heteroscedasticity and non-normality

I am performing a simple linear regression with the lm() function to make statements about the association between the two variables. But I am not sure if my ...
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