Contents
How does information value work?
Information Value analysis is a data exploration technique that helps determine which columns in a data set have predictive power or influence on the value of a specified dependent variable. IV is based on an analysis of each individual independent variable in turn without considering other predictor variables.
How do you increase information value?
Information value increases as bins / groups increases for an independent variable. Be careful when there are more than 20 bins as some bins may have a very few number of events and non-events.
How is information value measured?
Foundational Measures of Information Value
- Validity: The percent of records with correct values.
- Scarcity: An estimate of the percent of other organizations who don’t have this data.
- Coverage: The number of records in the dataset as a percentage of the total universe of potential records.
What is weight evidence?
Weight of evidence refers to a systematic approach that scientists use to evaluate the totality of scientific evidence to assess if the science supports a particular conclusion.
Why should WoE be monotonic?
The WoE transformation through monotonic binning provides a convenient way to address each of aforementioned concerns. It is also worth mentioning that a numeric variable and its strictly monotone functions should converge to the same monotonic WoE transformation.
Which is true about the value of information?
Information Is Valuable. Every piece of information, public or not, has value to somebody: to other people, to companies and organizations, or to governments.
When is information value not an optimal feature?
Information value is not an optimal feature (variable) selection method when you are building a classification model other than binary logistic regression (for eg. random forest or SVM) as conditional log odds (which we predict in a logistic regression model) is highly related to the calculation of weight of evidence.
Why is it important to know information value ( IV )?
However, IV is a popular and widely used measure in the industry. The reason for this is some very convenient rules of thumb for variables selection associated with IV – these are really handy as you will discover later in this article.
When to use information value and weight of evidence?
Information Value (IV) and Weight of Evidence (WOE) Information value is a very useful concept for variable selection during model building. The roots of information value, I think, are in information theory proposed by Claude Shannon.