Monday, January 7, 2013

What is the modeling target (dependent variable(s))?

The modeling target, classically referred to as the dependent variable, is the value that is being estimated in the modeling process. Generally, a modeling process results in some mathematical or logical algorithm that has the target value as its outcome. Precise definition of the modeling target is crucial to the success of the project. It also is used in defining the samples that are collected for model development and validation. If this definition is in error then many steps will have to be redone.

In most projects there will be only one target value and that value will be either continuous or dichotomous (binary or zero/one). The type of target often determines the type of analysis that will be done to derive the final scoring algorithm.

On rare occasions, there may be more than one target. There are specialized tools that can deal with multiple targets, but they are the exception and evaluations of these projects must be done on a case by case basis.

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