Defining a target variable is one of the preliminary steps in building a predictive model. But is this really a simple and straightforward process. For example, I want to optimize insurance sales to existing customers on a database. The practitioner’s first inclination is to develop a simple insurance response model. Although this would most definitely drive sales, is this the real intended objective of the insurance team? Closer exploration with the team would indicate that the company’s revenue is driven not only by sales or response but the premium they pay. However, further investigation would reveal that the
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