![]() ![]() Hypotheses about why these associations exist can then be formed.ĭata mining initially appears to be quite similar to normal statistics. ![]() Instead of formulating a hypothesis from observations and then collecting data to see if the hypothesis is true or not, as in conventional research, data mining uses data that has already been collected and analyses it to see if links between different variables can be found. It has developed as a research tool in response to the increasing power and capabilities of computers and technology over the last few decades, which allow far larger amounts of data to be simultaneously handled than was previously possible. ![]() You have just fished for data.Data mining is the process by which large-scale data sets are examined in order to find previously unknown links between different variables. You would like to show progress, so you decide to include them in your report to management. Your company has no business in Ohio or Louisiana, and it there is no reasonable conclusion why these correlations exist, even though the p-values are less than 5%. Of the 100, two show statistical significance: interest rates on boat loans in south Louisiana and household debt in north Ohio. You download a database from a government website and decide to run a series of automated regressions. Imagine that instead of choosing only four macroeconomic indicators, you chose 100. This could have gone another way…īUT wait! This could have gone another way. An honest analyst would not make this claim, but show that there is no relationship. You had conflicting evidence of the statistical significance of two correlations, but since one side of the evidence supports a personal claim you would like to make, you decide to accept it. Since you’re in a bind, you decide to claim that GDP and Employment rate have a strong relationship to revenue, and that you’re going to explore this further. ![]()
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