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Classical Techniques: Statistics,
Neighborhoods, and Clustering
What is Statistics?
• Statistics is a branch of mathematics concerning the
collection and the description of data
• Statistics was in fact, born from very humble beginnings of
real-world problems from business, biology and gambling!
• Knowing statistics in everyday life will help the average
business person make better decisions by allowing them to
figure out risk and uncertainty when all the facts either
aren’t known or can’t be collected.
• Today, data mining has been defined independently of
Data, Counting and Probability
• One thing that is always true about statistics is that there is always data
• Statistics can help greatly in this process by helping to answer several
important questions about the data:
What patterns are there in my database?
What is the chance that an event will occur?
Which patterns are significant?
What is the high-level summary of the data that gives me some idea of
what is contained in my database?
• One of the great values of statistics is in presenting a high-level view
of the database that provides some useful information without
requiring every record to be understood in details
• The first step then in understanding
statistics is to understand how the data is
collected into a higher-level form – one of
the most notable ways of doing this is with
the histogram.
Histogram (cont’d)
Figure 6-1 An example database of customers with different Predictor
Statistics for Prediction
• Regression is a powerful and commonly used tool
in statistics and is discussed here
• Linear Regression:
– The simplest form of regression is simple linear
regression that contains only one predictor and a
– The relationship between the two can be mapped on a
two-dimensional space and the records plotted for the
prediction values along the Y-axis and the predictor
values along the X-axis.
Statistic for prediction (cont’d)
Nearest Neighbor
• Clustering and the nearest neighbor prediction techniques
are among the oldest techniques used in data mining
• Clustering is – namely, that like records are grouped or
clustered together.
• Nearest neighbor is a prediction technique that is quite
similar to clustering – in order to predict what a prediction
value is in one record, look for records with similar
predictor values in the historical database and use the
prediction value from the record that is ‘nearest’ to the
unclassified record
How to use Nearest Neighbor for Prediction
• One of the essential elements underlying the
concept of clustering is that one particular object
(whether it is a car, a food item, or a customer) can
be closer to another object than can some third
• The nearest neighbor prediction algorithm simply
stated is as follows:
– Objects that are ‘near’ each other will also have similar
prediction values. Thus, if you know the prediction
value of the objects, you can predict it for its nearest