Teaching - Curtis Kephart > Econometrics Notes & R Code (UCSC Econ113) >

Interpret Regression Coefficient Estimates - {level-level, log-level, level-log & log-log regression}

Interpreting Beta: how to interpret your estimate of your

regression coefficients (given a level-level, log-level, level-log,
and log-log regression)?

Assumptions before we may interpret our results:

 The Gauss–Markov assumptions* hold (in a lot of
situations these assumptions may be relaxed -
particularly if you are only interested in an
approximation - but for now assume they strictly hold).
* If you're interested in more details, read
the discussion here, or check out your textbook.
 Our coefficient estimates (our estimates of below)
are statistically significant and practically significant.
 With a multivariate model, we assume that other
independent variable(s) (x_2, x_3, ... x_n) are held
constant.
Running a Regression (Using R Statistics
Software)
Step-by-step example of how to do a
regression using R statistics software
(including the models below). I'll walk through
the code for running a multivariate regression
- plus we'll run a number of slightly more
complicated examples to ensure it's all clear.
Video 16:30 -
www.youtube.com/watch?v=Ktks5K95uQM

Model Dependent Independe Interpretation of β Video Review

or Response nt or
Variable Explanato Given a change in x, Given reader requests, I created
(y) ry how much do we expect y to short video explanations of how
Variable change by? to interpret regression estimates
(x)

Level-level Regression y x
Log-Level Regression
x (unit), we’d expect
Δy=β1Δx
“If you change x by one,
we’d expect y to change
by β1"
%Δy=100⋅β1⋅Δx
“if we change x by 1
our y variable to change by
100⋅β1 percent”
Technically, the
interpretation is the following:
but the
quoted interpretation is appr
oximately true for values -0.1
< β1 < 0.1 (and it's much
easier to remember.)
Interpreting Level-Level
Regression Coefficient
Estimate Results
We run a level-level regression
and interpret the regression
coefficient estimate results.
Simple example of regression
analysis with a level-level model.
Video 5:00 -
www.youtube.com/watch?v=TJA
CbJspao0
Log-Level Regression
Coefficient Estimate
Interpretation
We run a log-level regression
(using R) and interpret the
regression coefficient estimate
results. A nice simple example of
regression analysis with a log-
level model.
Video 6:40 -
www.youtube.com/watch?v=wXC
2kViEGz8
 Δy=(β1/100)%Δx
Level-Log Regression
y "If we increase x by one
percent,
we expect y to increase by
(β1/100) units of y."
Note, you cannot include
obs. for which x<=0 if x is
then logged. You either can't
calculate the regression
coefficients, or may
introduce bias.
%Δy=β1%Δx
Log-Log Regression
“if we change x by one
percent,
we’d expect y to change
by β1 percent”
Note, you cannot include
obs. for which x<=0 if x is
logged. You either can't
calculate
the regression coefficients, o
r may introduce bias.
Level-Log Regression
Coefficient Estimates
We run a level-log regression and
help understand the regression
coefficient estimates. A nice
simple example of regression
analysis.
Video 6:50
www.youtube.com/watch?v=L9ZL
6_DB4fQ
Log-Log Regression
Coefficient Estimate Results
We do a log-log regression and
explain the regression coefficient
estimate results. Simple example
of regression analysis with a log-
log model.
Video
5:30 www.youtube.com/watch?v=
NZCSt9Wkpkl