Raw versus JPEG formats
Jpeg is a compressed file format used for displaying and printing images. Jpeg is also called a lossy format, because repeatedly saving a jpeg file will slowly degrade the quality. RAW format contains all of the camera data captured by your camera's sensor.
Most photographers start out shooting in JPEG, because the files are smaller and you don't need a RAW editor to save them. However, RAW files store much more information, especially in the shadows and highlight areas, and allow for custom white balancing to be done. When shooting raw, white balance, shadows/highlights, tone (contrast), sharpening, color space, and exposure (to a limited extent) can be managed in your computer. An extra stop of exposure in the highlights and shadows can be recovered when shooting in raw. Many serious photographers shoot in RAW, although some excellent macro photographers mainly shoot in JPEG because they may not have time for raw file processing.
Let's review some differences between RAW and JPEG files formats:
RAW files
Pros
* Saves all of the data from your camera sensor
* Gives you more data to work with when adjusting color space, white balance, tone, exposure
* Has12-14 bits of color vs 8 bits in jpeg
* Has a higher dynamic range
Cons
* Needs to be converted to TIFF or JPEG to be displayed/printed
* Larger file format
* A RAW editor usually needs to be purchases, and upgraded for newer camera models
* Sometimes needs contrast adjustment
JPEG files
Pros
* Smaller format allows more photos to be stored on a memory card
* Photos can be instantly printed or displayed on the screen / web
* Some recent dSLR's, such as the D300, do an excellent job of noise reduction, sharpening, exposure control, etc. when creating a jpeg, saving the user time in post-processing
Cons
* - difficult to adjust exposure, recover highlights, and change white balance
* - lossy format means repeated saves slowly degrades image quality. Repeated changes can introduce types on noise known as JPEG artifacts