In the overall knowledge discovery process, before data mining itself, data preprocessing plays a crucial role. One of the first steps concerns the normalization of the data. This step is very important when dealing with parameters of different units and scales. For example, some data mining techniques use the Euclidean distance. Therefore, all parameters should have the same scale for a fair comparison between them.
Two methods are usually well known for rescaling data. Normalization, which scales all numeric variables in the range [0,1]. One possible formula is given below:
Both of these techniques have their drawbacks. If you have outliers in your data set, normalizing your data will certainly scale the “normal” data to a very small interval. And generally, most of data sets have outliers. When using standardization, your new data aren’t bounded (unlike normalization).
So my question is what do you usually use when mining your data and why?
Note: Thanks to Benny Raphael for fruitful discussions on this topic. Thanks to Jim for a correction on May 26th 2014.