[Limdep Nlogit List] determining elasticities for transformed variables

Brett Smith bsmith at biz.uwa.edu.au
Fri Jul 25 15:14:20 EST 2008

Dear List

One problem I and others here are facing is obtaining elasticities on
transformed variables included in multinomial discrete choice exercises.
Presently I have completed the task manually but this has been for MNL which
is not so difficult. However a colleague wishes to use a transformed
variable in a NL and this does not prove to be so easy; particularly when
the choice sets are not universal.

For example say we wanted to calculate the elasticity with respect to cost
(ci) in the following expression (where y is income)

Vi= a*Log^2(y-ci) + b*log(y-ci) 

dVi/dCi = a*2*log(y-ci)/(y-ci) + b*1/(y-ci)

dprobj/dVi depends on the model specification.

The marginal effects are dprobj/dVi * dVi/dCi

However, if we use the software to calculate marginal effects we will get
the following 

dprobj/dVi * a  + dprobj/dVi * b

and the corresponding elasticities have the same sort of differences.


I have thought of different ways by using maxit=0 and fixing parameters etc.
but nothing seems to work. So I have resorted to doing the operation
manually in the data area (the files are just too big to export to XL and it
is no easier in that software). However, when it comes to NL or more
advanced models the operation becomes quite tricky.

So before we hand over to our resident programmer (Doina) I was wondering if
any one else had a solution to this problem that may be tackled by mere
humans like me.

Kindest regards,


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