Elasticities and the Inverse Hyperbolic Sine Transformation

Marc F. Bellemare; Casey J. Wichman

doi:10.1111/obes.12325

Elasticities and the Inverse Hyperbolic Sine Transformation

Marc F. Bellemare, Casey J. Wichman

Applied Economics

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387 Scopus citations

Abstract

Applied econometricians frequently apply the inverse hyperbolic sine (or arcsinh) transformation to a variable because it approximates the natural logarithm of that variable and allows retaining zero-valued observations. We provide derivations of elasticities in common applications of the inverse hyperbolic sine transformation and show empirically that the difference in elasticities driven by ad hoc transformations can be substantial. We conclude by offering practical guidance for applied researchers.

Original language	English (US)
Pages (from-to)	50-61
Number of pages	12
Journal	Oxford Bulletin of Economics and Statistics
Volume	82
Issue number	1
DOIs	https://doi.org/10.1111/obes.12325
State	Published - Feb 1 2020

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© 2019 The Department of Economics, University of Oxford and John Wiley & Sons Ltd

Keywords

Elasticities
Elasticity
Inverse Hyperbolic Sine

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Elasticities and the Inverse Hyperbolic Sine Transformation

Abstract

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Keywords

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