Taking logarithm when the independent variable contains zeros in regression analysis: a new approach

Donald Lien, Yue Hu and Long Liu

Applied Economics Letters, 2025, vol. 32, issue 5, 630-636

Abstract: We propose a two-part model to deal with the problem of taking logarithm when the independent variable in a regression contains zeros. In particular, we generalize the conventional approach by choosing the optimal constant to add to the variable before taking logarithm, treating observations with zero values as a separate group. The empirical evidence supports our proposed model.

Date: 2025
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DOI: 10.1080/13504851.2023.2278595

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