Box-Cox Transformation

We now discuss one of the most commonly used transformations, namely the Box-Cox transformations based on the parameter λ, which is defined by the function f(x) where

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If we need to ensure that all values of x are positive (e.g. to avoid the situation where ln λ is undefined when λ = 0), then we first perform the transformation g(x) = x + a for some constant a which is larger than all the values of x under consideration. The Box-Cox transformation then takes the form

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Our goal is to determine the value of the λ parameter which gives the most useful transformation. We discuss two cases. The first where our goal is to obtain linear data and the second where we are looking for normally distributed data.

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