Linear Regression

Re-expressing Data
Often the conditions necessary for performing linear regression aren’t satisfied in
a data set. However, it may still be possible to use these methods if we reexpress
one or both of the variables.
To re-express data we need be able to create new variables using STATA. We
can do this using the generate command. For example to create a new variable
named logx which is the logarithm of an already existing variable x, we type:
generate logx = log(x)
If we instead wanted to create a variable that is the square root of x, we could
type
generate sqx = sqrt(x)
In general, the command is on the format:
generate new_variable = expression(old_variable)
where expression is the mathematical function applied to the old variable.
Note that by default STATA uses log base e.
Linear regression using re-expressed data
In this portion of the tutorial we will be working with the data set discussed in
example 10.11 on page 256 of the textbook. The data set gives information on
the highest paid baseball players in the period spanning 1980-2001. The data set
consists of 3 variables player, year and salary. To access the data type:
use http://www.stat.columbia.edu/~martin/W1111/Data/salary
in the command window.
We begin by making a scatter plot of salary and year.
scatter salary year