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Cross and Direct Elasticity calculation for Nested Logit

Ask questions about post-estimation functions (e.g. prediction, conditionals, etc) or other processing of results.
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lucia
Posts: 3
Joined: 06 Apr 2022, 06:28

Cross and Direct Elasticity calculation for Nested Logit

Post by lucia »

Hi Professor,

I have estimated a nested logit model using Apollo. I wonder how I could calculate the Direct Elasticity. Is that possible to provide an example in calculating it in R? I think for Cross-Elasticity within the nest is the same with Multinominal Logit, how about cross-elasticity between nests?

Thank you!
stephanehess
Site Admin
Posts: 974
Joined: 24 Apr 2020, 16:29

Re: Cross and Direct Elasticity calculation for Nested Logit

Post by stephanehess »

Hi

other than calculating them analytically, you can approximate them numerically just as in the MNL example MNL_SP_covariates.r

Stephane
--------------------------------
Stephane Hess
www.stephanehess.me.uk
lucia
Posts: 3
Joined: 06 Apr 2022, 06:28

Re: Cross and Direct Elasticity calculation for Nested Logit

Post by lucia »

Hi Professor Hess,

Thank you for your prompt reply!

I have another question relating to arc elasticity for dummy variables.

I manually changed the variable to 0 and to 1 by adding two new columns, but when I calculate the arc elasticity, it shows an Error in predictions_base[, "auto"]: incorrect number of dimensions. I am not sure whether I calculate it in the wrong way.

I attached the code and description below for you to review.

#add two colume
database$rail_use0 <- c(0:0)
database$rail_use1 <- c(1:1)

#estimate 0 model
database$rail_use = database$rail_use0
apollo_inputs = apollo_validateInputs()
predictions_base = apollo_prediction(NL_model, apollo_probabilities, apollo_inputs, prediction_settings=list(runs=30))

#estimate 1 model
database$rail_use = database$rail_use1
apollo_inputs = apollo_validateInputs()
predictions_new = apollo_prediction(EC_model, apollo_probabilities, apollo_inputs)

#elasticity calculation
(predictions_new[,"rail"]-predictions_base[,"rail"])/(predictions_new[,"rail"]+predictions_base[,"rail"])

Thank you!
Lucia
stephanehess
Site Admin
Posts: 974
Joined: 24 Apr 2020, 16:29

Re: Cross and Direct Elasticity calculation for Nested Logit

Post by stephanehess »

Lucia

first, your denominator doesn't look correct, as you should only have the base prediction in, not the sum of base and future.

I believe the error you are getting is because for your base prediction, you are using sampling from the asymptotic variance covariance matrix, so try without runs

Stephane
--------------------------------
Stephane Hess
www.stephanehess.me.uk
lucia
Posts: 3
Joined: 06 Apr 2022, 06:28

Re: Cross and Direct Elasticity calculation for Nested Logit

Post by lucia »

Hi Prof. Hess,

Thank you very much for your clarification, really appreciate it!

Kind Regards,
Lucia
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