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Usually "normalization" means re-expressing univariate data to make values lie within a specified range.
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Confused about proper way to normalize two variables
However, if for example you wanted to compare cities to see what proportion of ALL vacancies in each city were residential, you could use the second approach (or even a third normalization: res_vac / … In short, it's the question that you're trying to answer with the data that guides which normalization approach to use--there's no single "right" answer for all purposes. …