and a robust regression approach leads to a more precise model. Econometric application Economists often characterize production relationships by some variant of the Box–Cox transformation. Consider a common representation of production Q as dependent on services provided by a capital stock K and by labor hours N: Solving for Q by inverting the Box–Cox transformation we find which is known as the constant elasticity of substitution (CES) production function. The CES production function is a homogeneous function of degree one. When λ = 1, this produces the linear production function: When λ → 0 this produces the famous Cobb–Douglas production function: Activities and demonstrations The SOCR resource pages contain a number of hands-on interactive activities demonstrating the Box–Cox (power) transformation using Java applets and charts. These directly illustrate the effects of this transform on Q–Q plots, X–Y scatterplots, time-series plots and histograms. Yeo–Johnson transformation The Yeo–Johnson transformation allows also for zero and negative values of . can be any real number, where produces the identity transformation. The transformation law reads: Notes References External links (fixed link) Sanford Weisberg, Yeo-Johnson Power Transformations Normal distribution Statistical data transformation