Data Preparation - Cleansing, integrating, and transforming data

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Data Retrieval Phase and Modeling

• Data from retrieval phase is often "diamond in the rough."
• Sanitization and preparation are crucial for better performance and less time spent on output correction.
• Data transformation is necessary for the model to fit specific data formats.
• Early correction of data errors is recommended.
• Corrective actions may be necessary in realistic settings.
• Below figure shows common actions during data cleansing, integration, and transformation.

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1. Data Cleaning

Data cleansing is a sub process of the data science process that focuses on removing errors in your data so your data becomes a true and consistent representation of the processes it originates from.

1.1. Data Entry Errors Overview

• Data collection and entry are error-prone processes requiring human intervention.
• Human errors can include typos or loss of concentration.
• Machine data collection also faces errors due to human sloppiness or machine or hardware failure.
• Examples include transmission errors and bugs in the extract, transform, and load phase (ETL).
• Hand-checking every value is recommended for small data sets.
• Data errors can be detected by tabulating data with counts.
• Frequency tables can be created for variables with only two values.

1.2.Outliers in Data Analysis

• Outliers are observations that seem distant from others or follow a different logic or generative process.
• Finding outliers is easy using plots or tables with minimum and maximum values.
• An example is provided where a normal distribution (Gaussian distribution) is expected, showing high values in the bottom graph.
• Outliers can significantly influence data modeling, so it's crucial to investigate them first.

1.3. Dealing with Missing Values in Data Science

• Missing values aren't always wrong but need separate handling.
• They may indicate data collection errors or ETL process errors.
• Common techniques used by data scientists are listed in table 2.4.

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2. Transforming Data for Data Modeling

• Data cleansing and integration are crucial for data modeling.
• Data transformation involves transforming data into a suitable form.
• Linear relationships between input and output variables can be simplified by transforming the log of independent variables.
• Combining two variables into a new variable can also be used.

Reducing Variables in Models

• Overloading variables can hinder model handling.
• Techniques like Euclidean distance perform best with 10 variables.
• Reducing the number of variables can add new information to the model.

Turning Variables into Dummies in Data Science

• Variables can be transformed into dummy variables, which can only take two values: true(1) or false(0).
• Dummy variables indicate the absence of a categorical effect explaining an observation.
• Separate columns for classes stored in one variable are created, with 1 indicating present classes and 0 otherwise.
• Example: Turn Weekdays into Monday through Sunday columns to show if the observation was on a Monday.
• This technique is popular in modeling and is not exclusive to economists.
• The next step is to transform and integrate data into usable input for the modeling phase.

3. Data Combination from Different Sources

• Data sources include databases, Excel files, text documents, etc.
• Data science process is the focus, not presenting scenarios for every type of data.
• Other data sources like key-value stores and document stores will be discussed in later sections.

Different Ways of Combining Data

1. Joining: enriches an observation from one table with information from another.
2. Appending or stacking: adds observations from one table to another.
3. Combining data allows creation of new physical or virtual tables.
4. Views consume less disk space