Interpreting Logged Independent Variables in OLS
Logging data is almost as dangerous as logging trees; if you don’t do either the right way, the consequences could be undesirable. Below I will explain why we log data in OLS. Then I will discuss how to interpret the coefficient of a logged independent variable in an OLS model. The interpretation is not as straight forward as it normally is in a linear OLS model. If it is not done carefully, the results of the model may be difficult to understand. More following the jump….