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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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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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Multi-level Elasticities Relation

Assuming I have a model with elasticities at three different levels, Elasticities between regions. Elasticities between categories (not by region but overall) Elasticities between products within the ...
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Elasticity involving returns to scale in regression question

Hi for this question I don't quite get what is asking. What exactly does it mean by 'economise'? I understand if the elasticity is higher then it is more elastic, so it is more responsive to the ...
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38 views

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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7 views

Effect of Time Events on Short Term Price Elasticity

I'm trying to build a model to understand units purchased over time for a product whose price changes frequently. Would it be possible to use a multivariate regression where short term week over week ...
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24 views

Price elasticity calculation for smartphones

I have sales data of several refurbished smart phone devices. The sales occurs daily but not all phones are sold daily.. How do i calculate price elasticity of this data.. the sales are wholesale ...
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41 views

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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39 views

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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1answer
76 views

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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1answer
199 views

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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162 views

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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Elasticity model tends to underpredict

If anyone has modelled own price elasticity and found that their estimates tend to usually underpredict it.. can they share any ideas around how to go about modifying the models to get a more accurate ...
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479 views

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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581 views

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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Transform the sd of slope into that of the corresponding elasticity - for impulse response function estimates

As the title implies, I want to transform the sd of slope into the sd of the corresponding elasticity, particularly, in the context of impulse response function in VAR model. Some background ...
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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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1answer
2k views

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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1answer
30 views

Interpretation - after transforming slope to elasticity

Basically, my stupid 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%, ...
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2answers
68 views

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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351 views

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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1answer
345 views

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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2k views

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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130 views

own and cross elasticity for many products

This publication uses this formula to fit a model to predict the demand of a product A: ...
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106 views

Computing arc elasticity for categorical variables

I want to compute arc elasticity for a categorical variable that has more than 2 categories. In fact, I have estimated a multinomial logit model of mode choice and have included street type as a ...
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2answers
3k views

Interpret eydx, eyex in margins, Stata

Suppose the regression is y=beta_0+beta_1*x + epsilon. I obtain the eydx=.295 by magins eydx(x) command. What does Stata really do? Does Stata actually regress <...
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1answer
431 views

Log-log elasticities estimation

A simple linear regression model is given by $$\log(q)=b_1+b_2\log(p)+e$$ In this model $b_2$ is the derivative of $\log(p)$ with respect to $\log(p)$, that is, $$b_2=\frac{d \log(q)}{d \log(p)}=\...
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1answer
179 views

Name for “probability density elasticity” property?

For standard normal Z, the change in probability density associated with equally sized changes in z is obviously greater for values of z that are further away from the mean/mode. For example, if z=0,...
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1answer
1k views

Elasticities for Multinomial Logit Model (Stata)

I estimat a multinomial logit model in Stata. Is it possible to compute elasticities from the MLogit model? If so, do I need to take the logarithm of the y and x variable, or only the log of x? I ask ...
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1k views

Lagging/Leading Indicator Length Time

I tried looking this question up on google and didn't find material that answered my question. But my questions are: (1) Is there a method to determine how long it takes a leading indicator to ...
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Estimating elasticity of $y$ with respect to $x$ in a log-log specification

My rudimentary workings so far is that; $\log(y_i/x_i) = \log(y_i)-\log(x_i)$ Factorise, so, $\log(y_i/x_i) = \log(y_i) + \upsilon_i - \log(\gamma_i + 1)$ Thus, elasticity of $y$ to $x$ is always $...
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611 views

Price Elasticity Calculation

I have a question concerning price elasticity calculation. Let us say that I have 26 points in time where for each one I have recorderd price $P_t$ and demand $D_t$ for a product. One way to ...
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1answer
3k views

Understanding the price elasticity interaction in a regression model

The question that follows is derived from a SAS User's Group paper available on the web (Price and Cross Price Elasticity Estimation Using SAS). The objective is to calculate price elasticities (own ...
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235 views

Explanation for negative cross-price elasticities if the two alternatives cannot be complements

I would like some help in interpreting some odd cross-price elasticities that I got from my model. I estimated the following multinomial probit model and calculated the elasticities post-estimation: ...
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2answers
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Instrumental variable identification for price elasticity

I am working on a price elasticity problem and i am using Log-Log linear model. Below are the set of variables Dependent variable: logarithm of my quantity sold (LogQ) Independent variable: ...
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2answers
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Instrumental variables regression Vs Linear Regression for price elasticity

Based on comment here that What do "endogeneity" and "exogeneity" mean substantively? should we use linear regression or instrumental regression for price elasticity? As price and ...
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1answer
2k views

Calculating income elasticity of demand

My model is as follows: $$Y=\beta_0+\beta_1X_1+\beta_2X_2+\beta_3X_3+\beta_4X_4.$$ My income variable is represented by $X_2$. When it comes to calculating the income elasticity of demand (demand ...
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Heckman elasticities failed due to encountering discontinuous region with missing values - Stata

Please note first of all that this is a double-posting of a question on statalist from the 17.1.2016 which as of now has not received any answer. I guess that its all right to double-post now because ...
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1answer
209 views

Price Elasticity at customer level

Has anyone worked on Price Elasticity model at customer level? In Insurance Industry, insurance policies from a insurer that have been given a renewal offer in the period of 2 years are taken. Target ...
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442 views

log-log models vs margins eyex() for elasticities

I'm trying to estimate the elasticity between debt and interest rate for different values of interest. I am using a time series dataset. I made a categorical variable for interest so that I can group ...
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1answer
241 views

Substitution matrix from cross elasticity

Is there a way to calculate a subsitution matrix from cross elasticy matrix ? I have 5x5 cross elasticy matirx for 5 SKUs. I am trying to simulate SKUs demand switch in case of price changes.
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1answer
767 views

Computing elasticity of log-transformed variable in probit model

I would like to estimate the own-and cross-price elasticities of demand of a health product. Consider following model: $Product_{ij}=\beta_0+\beta_1ln(priceA)_j+\beta_2ln(priceB)_j+\beta_3Insurance_{...
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Which type of regression model do I need and what do I need to do to my variable to allow it to work?

I am trying to build a regression model for price sensitivity. I want to be able to show the number of products ordered based on changes to the list price and out of pocket price for a given product. ...