Units of Measurement and the Inverse Hyperbolic Sine Transformation

Publikation: Working paperForskning


The inverse hyperbolic sine (IHS) transformation is frequently applied in econometric studies to transform right-skewed variables that include zero or negative values. We confirm a previous study that shows that regression results can largely depend on the units of measurement of IHS-transformed variables. Hence, arbitrary choices regarding the units of measurement for these variables can have a considerable effect on recommendations for policies or business decisions. In order to address this problem, we suggest a procedure for choosing units of measurement for IHS-transformed variables. A Monte Carlo simulation assesses this procedure under various scenarios and a replication of the study by Bellemare and Wichman (2019) illustrates the relevance and applicability of our suggested procedure.
UdgiverDepartment of Food and Resource Economics, University of Copenhagen
Antal sider20
StatusUdgivet - 2019
NavnIFRO Working Paper

Antal downloads er baseret på statistik fra Google Scholar og www.ku.dk

Ingen data tilgængelig

ID: 232298838