The hearing aid includes a signal processor having a level-dependent filter section and a level-independent filter section. The level-dependent filter section provides level-dependent gain wherein sound is attenuated or amplified depending on the level of the incoming sound. The level-independent filter section provides substantially constant gain wherein sound that passes through the filter section is not changed in level, and provides transparency in that it corrects for insertion loss caused by the earpiece of the hearing aid when worn by the user. The level dependent and level independent filter sections, when fitted to the user, greatly improve the user's perception of sound.