Dear All
I want to ask a doubt which may sound very trivial, but I am unable to take a call. Suppose I have two variables say revenue and expenses. I want to compute income, which is revenue-expenses. Imagine that both of these variables are having some significant outliers. My question is, should I winsorize revenue first, followed by expenses and finally, income? Or, can I compute revenue-expenses, and get the income and winsorize the income only. Research articles do often winsorize variables at 1% and 5%, but they are silent on whether it is the derived variables or main variables, that get winsorized. I have seen comments by some experts in Stata who don't think winsorization as a good idea, but given a choice of winsorization, how should I do it. Once again sorry for my trivial doubt