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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32 views

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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17 views

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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8 views

Price Elasticity

I have 4 years of monthly data, 48 data points. To estimate price elasticity of demand I use a linear regression of that type: quantity ~ price + other interesting variables. My problem is that in 48 ...
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28 views

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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1answer
150 views

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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92 views

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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67 views

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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18 views

Log - Log Regression in Non-Stationary Cointegrated Time Series

I want to develop the following model: $$\log{Y(t)} = \alpha + \beta_{1}\log{X(t)} + \beta_{2}D(t)$$ where $Y\in\mathbb{R_{\gt 0}}$, $X\in\mathbb{R_{\gt 0}}$ and $D\in\{0,1\}$ is a dummy variable in ...
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20 views

Elasticity Regression in Non-Stationary Time Series

I want to develop a time series model where the dependent variable (Y) is non-stationary and the covariate (X) is also non-stationary If I want to regress Y against X: Y(t) = a + b*X(t) should I ...
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57 views

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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Non Linear regression to obtain diminishing marginal effect / elasticity [duplicate]

I am working with some real estate data on housing units. For a given market, I have data on occupied units, rents, and control variables such as population, demographics, income levels etc. I'd like ...
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29 views

Questions on estimating elasticity and cross-elasticity using log-log regression model

For a regression model: Y = B0 + B1.X + B2.X2 + U, B1 and B2 is the marginal effect on ...
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23 views

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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29 views

Elasticity estimates with Tobit using margins command in State 12

I am running a tobit regression to model education expenditures (zero for some households) and tried using margins, eydx(*) to obtain the elasticity estimates, but ...
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28 views

Estimating sparse price elasticities in large data set

I am working with a data set that contains daily sales data for 500 different products over multiple years. My objective is to estimate the volume of each product that would be sold in the future if I ...
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39 views

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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59 views

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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112 views

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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84 views

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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89 views

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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42 views

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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248 views

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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85 views

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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1answer
1k 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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87 views

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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83 views

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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103 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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183 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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264 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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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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453 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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1k 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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728 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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28 views

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
4k 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
35 views

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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2answers
607 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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606 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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48 views

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
656 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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4k views

price elasticity and time series modelling

Formulas like this taken from here: ...
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46 views

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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181 views

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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204 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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157 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
5k 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
1k 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)}=\...