Frances Woolley has a post on the use of the inverse hyperbolic sine transformation for handling wealth as a variable (skewed and with lots of zeros).
The post is worth reading and the comments are really interesting. In particular, Chris Auld makes a very good case for simplicity and interpretability as a desirable property of statistical models in several of the comments.
There is also a thought provoking discussion of how to parameterize wealth that involves the sort of deep thinking about variables that we should do more of in epidemiology. In particular, in what sense is it reasonable to consider a person (especially in a country like Canada with strong entitlement programs) to truly have zero wealth.
Definitely worth the read.
Fed Watch: Solid Start to September
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