ETC5510: Introduction to Data Analysis

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# .monash-blue.outline-text[ETC5510: Introduction to Data Analysis]

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<h2 style="font-weight:900!important;">Regression and Decision Trees</h2>

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Lecturer: *Nicholas Tierney & Stuart Lee*

Department of Econometrics and Business Statistics

<span><i class="fas  fa-envelope faa-float animated "></i></span>  nicholas.tierney@monash.edu

May 2020

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# recap

- networks

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# Upcoming

- Peer evaluation of assignment #2 on Wednesday
- Project milestone #3 due this Friday, if you need guidance attend consultation

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# Overview

- What is a regression tree?
- How is it computed?
- Deciding when its a good fit
  - rmse
- Comparison with linear models
- Using multiple variables
- Next class:
  - How a classification tree differs from a regression tree?

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# Example

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# Let's predict Y using a linear model

```r
df_lm <- lm(y ~ x, df)
```

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# Assessing model fit

- Look at residuals
- Look at mean square error

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# Looking at the residuals: this is bad!

It basically looks like the data!

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# Looking at the Mean square error (MSE)

$$
MSE(y) = \frac{\sum_{i = 1}^{i = N} (y_i - \hat{y}_i)^2}{N}
$$
In R code:

```r
# calculate example of linear model MSE
```

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# Let's use a different model: "rpart"

```r
library(rpart)
# df_lm <- lm(y~x, data=df) - similar to lm! But rpart.
df_rp <- rpart(y~x, data=df)
```

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# Look at residuals

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# Look at MSE

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# Comparing lm vs rpart

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# What the output of a linear model looks like

```
## 
## Call:
## lm(formula = y ~ x, data = df)
## 
## Coefficients:
## (Intercept)            x  
##      0.8806      -2.2165
```

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# What the output of a rpart looks like

```
## n= 100 
## 
## node), split, n, deviance, yval
##       * denotes terminal node
## 
##  1) root 100 359.245100  0.8081071  
##    2) x>=0.2775916 24  16.840100 -1.4822830  
##      4) x>=0.3817438 12   3.832238 -2.0814410 *
##      5) x< 0.3817438 12   4.392090 -0.8831252 *
##    3) x< 0.2775916 76 176.745400  1.5313880  
##      6) x< 0.1426085 61  41.562800  0.9365995  
##       12) x>=-0.3999242 50  24.519860  0.7035330  
##         24) x< 0.05905847 41  11.729940  0.4807175  
##           48) x>=-0.1455513 25   5.653876  0.2281914 *
##           49) x< -0.1455513 16   1.990829  0.8752895 *
##         25) x>=0.05905847 9   1.481498  1.7185820 *
##       13) x< -0.3999242 11   1.981477  1.9959930 *
##      7) x>=0.1426085 15  25.842970  3.9501960 *
```

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# Predictions from linear model vs rpart

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# So what is going on?

- A linear model asks "What line fits through these points, to minimise the error"?
- A decision tree model asks "How can I best break the data into segments, to minimize some error?"

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# A linear model: draws the line of best fit

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# A regression tree: segments the data to reduce some error

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# Regression trees

- Regression trees recursively partition the data, and use the average response value of each partition as the model estimate
- It is a computationally intense technique that examines all possible partitions, and choosing the BEST partition by optimizing some criteria
- For regression, with a quantitative response variable, the criteria is called ANOVA:

`$$SS_T-(SS_L+SS_R)$$`
where `$SS_T = \sum (y_i-\bar{y})^2$`, and `$SS_L, SS_R$` are the equivalent values for the two subsets created by partitioning.

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# Break down: What is `$SS_T = \sum (y_i-\bar{y})^2$` ?

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# Break down: What is `$SS_T = \sum (y_i-\bar{y})^2$` ?

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