31. You created a predictive model of a quantitative outcome variable using multiple regressions. What are the steps you would follow to validate the model?
Since the question asked, is about post model building exercise, we will assume that you have already tested for null hypothesis, multi collinearity and Standard error of coefficients.
Once you have built the model, you should check for following –
– Global F-test to see the significance of group of independent variables on dependent variable
– Adjusted R^2
– RMSE, MAPE
In addition to above mentioned quantitative metrics you should also check for-
– Residual plot
– Assumptions of linear regression
32. Why L1 regularizations causes parameter sparsity whereas L2 regularization does not?
Regularizations in statistics or in the field of machine learning is used to include some extra information in order to solve a problem in a better way. L1 & L2 regularizations are generally used to add constraints to optimization problems.
In the example shown above H0 is a hypothesis. If you observe, in L1 there is a high likelihood to hit the corners as solutions while in L2, it doesn’t. So in L1 variables are penalized more as compared to L2 which results into sparsity.
In other words, errors are squared in L2, so model sees higher error and tries to minimize that squared error.
33. How can you deal with different types of seasonality in time series modelling?
Seasonality in time series occurs when time series shows a repeated pattern over time. E.g., stationary sales decreases during holiday season, air conditioner sales increases during the summers etc. are few examples of seasonality in a time series.
Seasonality makes your time series non-stationary because average value of the variables at different time periods. Differentiating a time series is generally known as the best method of removing seasonality from a time series. Seasonal differencing can be defined as a numerical difference between a particular value and a value with a periodic lag (i.e. 12, if monthly seasonality is present)
34. Can you cite some examples where a false positive is important than a false negative?
Before we start, let us understand what false positives are and what false negatives are.
False Positives are the cases where you wrongly classified a non-event as an event a.k.a Type I error.
And, False Negatives are the cases where you wrongly classify events as non-events, a.k.a Type II error.
In medical field, assume you have to give chemo therapy to patients. Your lab tests patients for certain vital information and based on those results they decide to give radiation therapy to a patient.
Assume a patient comes to that hospital and he is tested positive for cancer (But he doesn’t have cancer) based on lab prediction. What will happen to him? (Assuming Sensitivity is 1)
One more example might come from marketing. Let’s say an ecommerce company decided to give $1000 Gift voucher to the customers whom they assume to purchase at least $5000 worth of items. They send free voucher mail directly to 100 customers without any minimum purchase condition because they assume to make at least 20% profit on sold items above 5K.
Now what if they have sent it to false positive cases?
35. Can you cite some examples where a false negative important than a false positive?
Assume there is an airport ‘A’ which has received high security threats and based on certain characteristics they identify whether a particular passenger can be a threat or not. Due to shortage of staff they decided to scan passenger being predicted as risk positives by their predictive model.
What will happen if a true threat customer is being flagged as non-threat by airport model?
Another example can be judicial system. What if Jury or judge decide to make a criminal go free?
What if you rejected to marry a very good person based on your predictive model and you happen to meet him/her after few years and realize that you had a false negative?
36. Can you cite some examples where both false positive and false negatives are equally important?
In the banking industry giving loans is the primary source of making money but at the same time if your repayment rate is not good you will not make any profit, rather you will risk huge losses.
Banks don’t want to lose good customers and at the same point of time they don’t want to acquire bad customers. In this scenario both the false positives and false negatives become very important to measure.
These days we hear many cases of players using steroids during sport competitions. Every player has to go through a steroid test before the game starts. A false positive can ruin the career of a Great sportsman and a false negative can make the game unfair.
37. Can you explain the difference between a Test Set and a Validation Set? Validation set can be considered as a part of the training set as it is used for parameter selection and to avoid Overfitting of the model being built. On the other hand, test set is used for testing or evaluating the performance of a trained machine leaning model.
In simple terms, the differences can be summarized as-
• Training Set is to fit the parameters i.e. weights.
• Test Set is to assess the performance of the model i.e. evaluating the predictive power and generalization.
• Validation set is to tune the parameters.
38. What do you understand by statistical power of sensitivity and how do you calculate it?
Sensitivity is commonly used to validate the accuracy of a classifier (Logistic, SVM, RF etc.). Sensitivity is nothing but “Predicted TRUE events/ Total events”. True events here are the events which were true and model also predicted them as true.
Calculation of seasonality is pretty straight forward-
Seasonality = True Positives /Positives in Actual Dependent Variable
Where, True positives are Positive events which are correctly classified as Positives.
39. Give some situations where you will use an SVM over a RandomForest Machine Learning algorithm and vice-versa.
SVM and Random Forest are both used in classification problems.
a) If you are sure that your data is outlier free and clean then go for SVM. It is the opposite – if your data might contain outliers then Random forest would be the best choice.
b) Generally, SVM consumes more computational power than Random Forest, so if you are constrained with memory go for Random Forest machine learning algorithm.
c) Random Forest gives you a very good idea of variable importance in your data, so if you want to have variable importance then choose Random Forest machine learning algorithm.
d) Random Forest machine learning algorithms are preferred for multiclass problems.
e) SVM is preferred in multi-dimensional problem set – like text classification but as a good data scientist, you should experiment with both of them and test for accuracy or rather you can use ensemble of many Machine Learning techniques.
40. How do data management procedures like missing data handling make selection bias worse?
Missing value treatment is one of the primary tasks which a data scientist is supposed to do before starting data analysis. There are multiple methods for missing value treatment. If not done properly, it could potentially result into selection bias. Let see few missing value treatment examples and their impact on selection-
Complete Case Treatment: Complete case treatment is when you remove entire row in data even if one value is missing. You could achieve a selection bias if your values are not missing at random and they have some pattern. Assume you are conducting a survey and few people didn’t specify their gender. Would you remove all those people? Can’t it tell a different story?
>Available case analysis: Let say you are trying to calculate correlation matrix for data so you might remove the missing values from variables which are needed for that particular correlation coefficient. In this case your values will not be fully correct as they are coming from population sets.
Mean Substitution: In this method missing values are replaced with mean of other available values. This might make your distribution biased e.g., standard deviation, correlation and regression are mostly dependent on the mean value of variables.
Hence, various data management procedures might include selection bias in your data if not chosen correctly.