If, on the other hand, each cardholder has a propensity to ski score, it can send the ad to the 500,000 most likely candidates. Examples of estimation tasks include: Estimating the number of children in a family› Estimating a family’s total household income› Estimating the lifetime value of a customer› Estimating the probability that someone will respond to a balance› transfer solicitation. Regression models and neural networks (discussed in are well suited to estimation tasks. Survival analysis) is well suited to estimation tasks where the goal is to estimate the time to an event, such as a customer stopping.
Prediction is the same as classification or estimation, except that the records are classified according to some predicted future behavior or estimated future value. In a prediction task, the only way to check the accuracy of the classifi cation is to wait and see. The primary reason for treating prediction as a sepa rate task from classification and estimation is that in predictive modeling there are additional issues regarding the temporal relationship of the input variables or predictors to the target variable. Any of the techniques used for classification and estimation can be adapted for use in prediction by using training examples where the value of the vari able to be predicted is already known, along with historical data for those examples. The historical data is used to build a model that explains the current observed behavior. When this model is applied to current inputs, the result is a prediction of future behavior.