The Analytics Edge

4.3 Keeping an Eye on Healthcare Costs: The D2Hawkeye Story

Quick Question

In the previous video, we constructed two CART models. The first CART model, without the loss matrix, predicted bucket 1 for 78.6% of the observations in the test set. Did the second CART model, with the loss matrix, predict bucket 1 for more or fewer of the observations, and why?

According to the penalty matrix, some of the worst types of errors are to not predict bucket 1 when the actual cost bucket is bucket 1. Therefore, the model with the penalty matrix predicted bucket 1 more frequently. close

According to the penalty matrix, some of the worst types of errors are to predict bucket 1 when the actual cost bucket is higher. Therefore, the model with the penalty matrix predicted bucket 1 more frequently. close

According to the penalty matrix, some of the worst types of errors are to not predict bucket 1 when the actual cost bucket is bucket 1. Therefore, the model with the penalty matrix predicted bucket 1 less frequently. close

According to the penalty matrix, some of the worst types of errors are to predict bucket 1 when the actual cost bucket is higher. Therefore, the model with the penalty matrix predicted bucket 1 less frequently. check

Check   Show Solution

Explanation If you look at the classification matrix for the second CART model, we predicted bucket 1 less frequently. This is because, according to the penalty matrix, some of the worst types of errors are to predict bucket 1 when the actual cost bucket is higher.

• Back: Video 8: Predicting Healthcare Cost in R
• Continue: Video 9: Results