Dear R users,
I have a question regarding using logged ratio as dependent variable in
regression. I am reading a paper discussing how a waste management facility
has influenced housing price in surrounding areas. The author used
Ln(P2/P1) as the dependent variable, where P1 and P2 represent trade prices
of the same property before and after the opening of the facility. One key
explanatory variable is the distance from the property to the facility. The
author used spatial lag models to control for spatial autocorrelation
between nearby properties.
The author explained in the paper that the logged ratio is equivalent to
the percentage change in the property price between time 1 and time 2.
Thus, if the coefficient of the distance variable is 0.02, it means that
with 1 mile closer to the facility, homes have a net appreciation rate 2%
lower than comparable properties.
I wonder if this is the appropriate way to interpret model results. If yes,
I also wonder how the distance coefficient should be interpreted if the
distance variable takes natural log form in the regression. Thank you!
Gary
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