Confidence Interval vs. Prediction Interval | by Jonte Dancker | Nov, 2024
A small however necessary distinction that you must know
In lots of information science-related duties, we need to know the way sure we’re concerning the end result. Understanding how a lot we will belief a end result helps us to make higher choices.
As soon as we have now quantified the extent of uncertainty that comes with a end result we will use it for:
- state of affairs planning to guage a best-case and worst-case state of affairs
- danger evaluation to guage the influence on choices
- mannequin analysis to match totally different fashions and mannequin efficiency
- communication with decision-makers about how a lot they need to belief the outcomes
The place does the uncertainty come from?
Let’s take a look at a easy instance. We need to estimate the imply worth of a 300-square-meter home in Germany. Amassing the information for all 300-square-meter homes isn’t viable. As a substitute, we are going to calculate the imply worth based mostly on a consultant subset.
