CART, or Classification and Regression Trees, is a popular method for conducting machine learning and predictive modeling. It is a type of decision tree that can be used to predict a categorical response variable based on a set of predictor variables. CART is a widely used technique in data mining and predictive modeling because of its ability to handle large amounts of data, its interpretability, and its ability to handle both continuous and categorical variables.
In CART, a tree is constructed by dividing the predictor space into smaller and smaller regions. Each split is made based on the predictor variable that provides the greatest decrease in impurity, which is a measure of how well the data can be separated into different classes. For example, in a classification problem where the response variable is whether or not a customer will churn, the predictor space could be divided based on the customer’s age, income, and number of times they have contacted customer service.
The tree continues to split until it reaches a stopping criterion, such as a minimum number of observations in a leaf node or a maximum depth of the tree. The final tree can then be used to make predictions for new data by following the splits made in the tree and arriving at a final leaf node.
One of the key benefits of CART is its interpretability. The splits made in the tree can be easily understood and explained, which is useful for business applications where the model needs to be understood by non-technical stakeholders. Additionally, the tree structure provides a clear indication of the most important predictor variables, as they will appear higher up in the tree.
An example of CART in action is a model to predict whether a customer will churn based on their account information. The predictor variables could include their age, income, number of times they have contacted customer service, and whether or not they have used a premium service. The tree might start by splitting the data based on age, with younger customers being more likely to churn. It could then split on income, with lower income customers being more likely to churn. The tree would continue to split based on the remaining predictor variables until it reaches a stopping criterion.
Once the tree is constructed, it can be used to make predictions for new customers. For example, if a new customer has an age of 30, an income of $50,000, has contacted customer service twice, and has not used a premium service, the tree would split on age, then income, and finally on the number of times the customer has contacted customer service. The final leaf node would indicate the predicted probability of churn for this customer.
In summary, CART is a powerful tool for predictive modeling and machine learning. It is easy to interpret and can handle both continuous and categorical variables. It is commonly used in business applications where the results need to be understood by non-technical stakeholders.