Many forms of data mining model are predictive. For example, a model might predict income based on education and other demographic factors.
An accurate prediction function does not imply that the function is an accurate model of the phenomenon being analysed, just that it makes an accurate prediction given the data.
- Ranking: Predict the order of relevance
It's easier to invent the future than try to predict it.
100% predictability = 0% innovation
The best way to predict the future is to invent it.
I've always been more interested in the future than in the past.
Prediction vs Forecasting
Forecasting is the process of making predictions of the future based on past and present data (time serie) whereas prediction is a more more general term.
Predictions have an associated probability that gives the degree of uncertainty.
Prediction probabilities are also known as confidence (How confident can I be of this prediction?).
This Prediction probability is one way to indicate:
- and wiki/uncertainty
Example: Actionable Information
Data mining can derive actionable information from large volumes of data.
- a town planner might use a model that predicts income based on demographics to develop a plan for low-income housing.
- a car leasing agency might a use model that identifies customer segments to design a promotion targeting high-value customers.