Abstract
Predictive Analytics (PA) models are assuming increasing role in the world of big data for making decisions in many industries – marketing, banking, insurance, telecommunication, healthcare, cyber, and more. Even in the era of data mining and machine learning, the leading predictive models still belong to the realm of regression. While regression models were originally developed to explain phenomena, find relationships between variables, and draw conclusions, in prediction models the main objective is to build models which are general enough to apply for predicting unseen data, even at the expense of giving up some model accuracy. Therefore, models with good explanation power are not necessarily models with good prediction power, and vice versa. Focusing on regression models, we discuss in this article the differences between explanation and prediction models, propose several principles for building good predictive models, present several performance measures for assessing the quality of the prediction results in classification problems based on logistic regression, and conclude by discussing the deployment process of the model results for decision-making. We end up this article by briefly reviewing the non-parametric decision tree approach for building the PA model.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
In the following we use the terms predictors, explanatory variables, variables, independent variables, attributes and features interchangeably
References
Akaike, H. (1974). A New Look at the Statistical Identification Model, IEEE Trans. Auto. Control, 19, pp. 716-723.
Ben-Akiva, M., and Lerman, S.R. (1987). Discrete Choice Analysis, the MIT Press, Cambridge, MA.
Benjamini, Y., and Hochberg, Y. (1995). Controlling the False Discovery Rate: A Practical and Powerful Approach to Multiple Testing, J. R. Statistical Society, 57, pp. 289-300.
Bifet, A., Gavaldà, R., Holmes, G., and Pfahringer, B. (2018). Machine Learning for Data Streams with Practical Examples in Massive Online Analysis, Adaptive Computation and Machine Learning, MIT Press.
Breiman, L., Friedman, J., Olshen, R., and Stone, C. (1984), Classification and Regression Trees, Belmont, CA., Wadsworth.
DeGroot, M. H. (1993). Probability and Statistics 3rd edition, Addison-Wesley.
Diaconis, P. (1985). Theories of Data Analysis from Magical Thinking through Classical Statistics. In Exploring data tables, trends and shapes , Hoaglin, D. C., Mosteller, F. and Tukey, J. W. (edts), Wiley, NY, pp. 1–36.
Elkan, C. (1997). Boosting and Naïve Bayesian Learning, Technical Report CS97-557, University of San Diego, California.
Geman, S., Bienenstock, E., and Doursat, R. (1992). Neural Networks and Bias/Variance Dilema, Nueral Computation, 4, pp. 1–58.
Efoymson, M.A. (1960). Multiple Regression Analysis in Mathematical Method for Digital computers, Wiley, NY, pp. 191–203.
Goldberg, D. E. (1989). Genetic Algorithms in Search Optimization and Machine Learning. Addison-Wesley Publishing Company Inc.
Hastie, T., Tibshirani, R., and Friedman, J. (2009). The elements of Statistical Learning, Springer, NY.
Hochberg, Y., and Tamhane, A. C. (1987). Multiple Comparison Proceedings, John Wiley & Sons.
Kelleher, J. D., MacNamee, B., and D’Arcy, A. (2015). Fundamentals of Machine Learning for Predictive Data Analytics: Algorithms, Worked Examples, and Case Studies, MIT Press.
Lambert, P. J. (1993). The Distribution and Redistribution of Income, Manchester University Press.
Levin, N., and Zahavi, J. (2005). Data Mining for Target Marketing, The Data Mining and Knowledge Discovery Handbook, Maimon O., and Rokach, L., (eds), Springer, NY, pp. 1261–1301.
Miller, A. J. (2002). Subset Selection in Regression, Chapman and Hall.
Murthy, K.S. (1998). Automatic Construction of Decision Trees from Data: A Multi-Disciplinary Survey, Data Mining and Knowledge Discovery, 2, pp. 45–389.
Quinlan, J.R. (1986). Induction of Decision Trees, Machine Learning, 1, pp. 81–106.
Quinlan, J.R. (1993). C4.5: Program for Machine Learning, Morgan Kaufman Publishing, CA.
Rumelhart, D.E., McClelland, J.L., and Williams, R.J. (1986). Learning Internal Representation by Error Propagation, in Parallel Distributed Processing: Exploring the Microstructure of Cognition, Rumelhart, D.E., McClelland, J.L. and the PDP Researc Group, (eds.), MIT Press, Cambridge, MA.
Schwartz, G. (1978). Estimating the Dimension of a Model, Annals of Statistics, 6, pp. 486–494.
Shannon, C.E. (1948). A Mathematical Theory of Communications, Bell System Technical Journal, 27, pp. 379–423 & 623–656.
Shmueli, G. (2010). To Explain or to Predict? Statistical Science, 25, pp. 289–310.
Shmueli, G., and Koppius, O. (2011). Predictive Analytics in Information Systems Research, MIS Quarterly, 34, pp. 553–572.
Tukey, J.W. (1977). Some Thoughts on Clinical Trials, Especially Problems of Multiplicity, Science, 198, pp.679–684.
Vapnik, V.N. (1995). Support Vector Machines, Machine Learning, 20, pp. 273–297.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2023 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Zahavi, J. (2023). Predictive Analytics for Targeting Decisions. In: Rokach, L., Maimon, O., Shmueli, E. (eds) Machine Learning for Data Science Handbook. Springer, Cham. https://doi.org/10.1007/978-3-031-24628-9_33
Download citation
DOI: https://doi.org/10.1007/978-3-031-24628-9_33
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-031-24627-2
Online ISBN: 978-3-031-24628-9
eBook Packages: Mathematics and StatisticsMathematics and Statistics (R0)