> My question is: How to deal with the
> extreme/outlying values in a data set?
The real priority is to establish why you have extreme
highs. For example:

(1) is there a high imprecision in measuring the
values, so that the sample observations are actually
inaccurate? If so, is it relative to the value or a
flat error?

(2) do you have a skewed distribution of values?

(3) do you have two (or more) populations, only one of
which gives the high values?

and there may be others. Once you determine the reason
for extreme values, then you can more objectively know
how to deal with them. 

For example, if you think (2) is most likely than look
at transformations or distribution-free approaches to
geostatistics. You can find some of my papers in
dealing with positivel skewed distributions at:

http://uk.geocities.com/drisobelclark/resume/Publications.html

If (3) is more likely - as may be probable is your are
looking at an area where samples may be 'background'
or 'contaminated' - you really need to identify the
populations first. Then you may be able to apply a
mixture model together with indicator geostatistical
approaches.

If (1) is your problem, then you may be able to use a
rough non-parametric approach to get to cross
validation. The 'error statistics' in a cross
validation exercise will often assist in identifying
erroneous sample measurements.

Hope this helps
Isobel Clark




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