Introduction to Data Mining

Motivating Facts Trends leading to Data Flood More data is generated: Bank, telecom, other business transactions ... Scientific data: astronomy, biology, etc Web, text, and e-commerce Big Data Examples Europe's Very Long Baseline Interferometry (VLBI) has 16 telescopes, each of which produces 1 Gigabit/second of astronomical data over a 25-day observation session storage and analysis a big problem AT&T handles billions of calls per day so much data, it cannot be all stored -- analysis has to be done “on the fly”, on streaming data

Motivating Facts Largest databases in 2003 Commercial databases: Winter Corp. 2003 Survey: France Telecom has largest decision-support DB, ~30TB; AT&T ~ 26 TB Web Alexa internet archive: 7 years of data, 500 TB Google searches 4+ Billion pages, many hundreds TB IBM WebFountain, 160 TB (2003) Internet Archive (www.archive.org),~ 300 TB 5 million terabytes created in 2002 UC Berkeley 2003 estimate: 5 exabytes (5 million terabytes) of new data was created in 2002. www.sims.berkeley.edu/research/projects/how-much-info-2003/ US produces ~40% of new stored data worldwide

Historical Note: Many Names of Data Mining Data Fishing, Data Dredging: 1960- used by Statistician (as bad name) Data Mining :1990 -- used DB, business in 2003 – bad image because of TIA Knowledge Discovery in Databases (1989-) used by AI, Machine Learning Community also Data Archaeology, Information Harvesting, Information Discovery, Knowledge Extraction, ... Currently: Data Mining and Knowledge Discovery are used interchangeably

Big Picture Lots of hype & misinformation about data mining out there Data mining is part of a much larger process 10% of 10% of 10% of 10% Accuracy not always the most important measure of data mining The data itself is critical Algorithms aren’t as important as some people think If you can’t understand the patterns discovered with data mining, you are unlikely to act on them (or convince others to act)

Defining Data Mining The automated extraction of hidden predictive information from (large) databases Three key words: Automated Hidden Predictive Implicit is a statistical methodology Data mining lets you be proactive Prospective rather than Retrospective

Data Mining Is.. And more … Decision Trees Nearest Neighbor Classification Neural Networks Rule Induction K-means Clustering Algorithm And more …

Data Mining is Not.. Brute-force crunching of bulk data “Blind” application of algorithms Going to find relationships where none exist Presenting data in different ways A database intensive task A difficult to understand technology requiring an advanced degree in computer science

Data Mining vs. Database DB’s user knows what is looking for. DM’s user might/might not know what is looking for. DB’s answer to query is 100% accurate, if data correct. DM’s effort is to get the answer as accurate as possible. DB’s data are retrieved as stored. DM’s data need to be cleaned (some what) before producing results. DB’s results are subset of data. DM’s results are the analysis of the data. The meaningfulness of the results is not the concern of Database as it is the main issue in Data Mining.

Convergence of Three Technologies Increasing Computing Power DM Improved Data Collection And Mgmt Statistical & Learning Algorithms

Increased Computing Power Moore’s law doubles computing power every 18 months Powerful workstations became common Cost effective servers provide parallel processing to the mass market Improved Data Collection The more data the better (usually)

3. Improved Algorithms Techniques have often been waiting for computing technology to catch up Statisticians already doing “manual data mining” Good machine learning is just the intelligent application of statistical processes A lot of data mining research focused on tweaking existing techniques to get small percentage gains

Data Mining: On What Kind of Data? Relational databases Data warehouses Transactional databases Advanced DB and information repositories Object-oriented and object-relational databases Spatial databases Time-series data and temporal data Text databases and multimedia databases Heterogeneous and legacy databases WWW

Data Mining Application areas Science astronomy, bioinformatics, drug discovery, … Business advertising, CRM (Customer Relationship management), investments, manufacturing, sports/entertainment, telecom, e-Commerce, targeted marketing, health care, … Web: search engines, bots, … Government law enforcement, profiling tax cheaters, anti-terror(?)

Data Mining Tasks... Classification [Predictive] Clustering [Descriptive] Association Rule Discovery [Descriptive] Sequential Pattern Discovery [Descriptive] Regression [Predictive] Deviation Detection [Predictive]

Association Rules Given: A database of customer transactions Each transaction is a set of items Find all rules X => Y that correlate the presence of one set of items X with another set of items Y Example: 98% of people who purchase diapers and baby food also buy beer. Any number of items in the consequent/antecedent of a rule Possible to specify constraints on rules (e.g., find only rules involving expensive imported products)

Confidence and Support A rule must have some minimum user-specified confidence 1 & 2 => 3 has 90% confidence if when a customer bought 1 and 2, in 90% of cases, the customer also bought 3. A rule must have some minimum user-specified support 1 & 2 => 3 should hold in some minimum percentage of transactions to have business value

Example Example: For minimum support = 50%, minimum confidence = 50%, we have the following rules 1 => 3 with 50% support and 66% confidence 3 => 1 with 50% support and 100% confidence

Problem Decomposition - Example For minimum support = 50% = 2 transactions and minimum confidence = 50% For the rule 1 => 3: Support = Support({1, 3}) = 50% Confidence = Support({1,3})/Support({1}) = 66%

The Apriori Algorithm Fk : Set of frequent itemsets of size k Ck : Set of candidate itemsets of size k F1 = {large items} for ( k=1; Fk != 0; k++) do { Ck+1 = New candidates generated from Fk foreach transaction t in the database do Increment the count of all candidates in Ck+1 that are contained in t Fk+1 = Candidates in Ck+1 with minimum support } Answer = Uk Fk

Key Observation Every subset of a frequent itemset is also frequent => a candidate itemset in Ck+1 can be pruned if even one of its subsets is not contained in Fk

Apriori - Example Database D C1 F1 Scan D C2 C2 F2 Scan D

Partitioning Divide database into partitions D1,D2,…,Dp Apply Apriori to each partition Any large itemset must be large in at least one partition.

Partitioning Algorithm Divide D into partitions D1,D2,…,Dp; For I = 1 to p do Li = Apriori(Di); C = L1  …  Lp; Count C on D to generate L;

Partitioning Example L1 ={{Bread}, {Jelly}, {PeanutButter}, {Bread,Jelly}, {Bread,PeanutButter}, {Jelly, PeanutButter}, {Bread,Jelly,PeanutButter}} D1 L2 ={{Bread}, {Milk}, {PeanutButter}, {Bread,Milk}, {Bread,PeanutButter}, {Milk, PeanutButter}, {Bread,Milk,PeanutButter}, {Beer}, {Beer,Bread}, {Beer,Milk}} D2 S=10%

Partitioning Adv/Disadv Advantages: Adapts to available main memory Easily parallelized Maximum number of database scans is two. Disadvantages: May have many candidates during second scan.

Classification Given: Database of tuples, each assigned a class label Develop a model/profile for each class Example profile (good credit): (25 <= age <= 40 and income > 40k) or (married = YES) Sample applications: Credit card approval (good, bad) Bank locations (good, fair, poor) Treatment effectiveness (good, fair, poor)

Classification Example Sal (<=50K) (>50K) Tid Job Age Salary Class Self 30 30K C Class C Age c 1 Industry 35 40K C (>40) (<=40) 2 Univ. 50 70K C 3 Self 45 60K B Job Class C (Univ., Industry) 4 Univ. 30 70K B (Self) 5 Industry 35 60K A Class B Class A 6 Self 35 60K A 7 Self 30 70K A Training Data Set Sample Decision Tree

Decision Tree Flow-chart like tree structure Each node denotes a test on an attribute value Each branch denotes outcome of the test Tree leaves represent classes or class distribution Decision tree can be easily converted into set of classification rules

Example Decision Tree Splitting Attributes categorical categorical continuous Splitting Attributes class Refund Yes No NO MarSt Single, Divorced Married TaxInc NO < 80K > 80K NO YES The splitting attribute at a node is determined based on the Gini index.

Decision Trees Pros Fast execution time Generated rules are easy to interpret by humans Scale well for large data sets Can handle high dimensional data Cons Cannot capture correlations among attributes Consider only axis-parallel cuts

Regression Mapping a data item to a real-value E.g., linear regression Risk score=0.01*(Balance)-0.3*(Age)+4*(HouseOwned)

What is Cluster Analysis? Cluster: a collection of data objects Similar to one another within the same cluster Dissimilar to the objects in other clusters Cluster analysis Grouping a set of data objects into clusters Clustering is unsupervised classification: no predefined classes Typical applications As a stand-alone tool to get insight into data distribution As a preprocessing step for other algorithms

Example: customer segmentation Clustering Identifies natural groups or clusters of instances. Example: customer segmentation Unsupervised learning: Different from classification – clusters are not predefined but are formed based on the data Objects in each cluster are very similar to each other and are different from those in other clusters.

Customer Attrition: Case Study Situation: Attrition rate at for mobile phone customers is around 25-30% a year! Task: Given customer information for the past N months, predict who is likely to attrite next month. Also, estimate customer value and what is the cost-effective offer to be made to this customer.

Customer Attrition Results Verizon Wireless built a customer data warehouse Identified potential attriters Developed multiple, regional models Targeted customers with high propensity to accept the offer Reduced attrition rate from over 2%/month to under 1.5%/month (huge impact, with >30 M subscribers) (Reported in 2003)

Assessing Credit Risk: Case Study Situation: Person applies for a loan Task: Should a bank approve the loan? Note: People who have the best credit don’t need the loans, and people with worst credit are not likely to repay. Bank’s best customers are in the middle

Credit Risk - Results Banks develop credit models using variety of machine learning methods. Mortgage and credit card proliferation are the results of being able to successfully predict if a person is likely to default on a loan Widely deployed in many countries

Successful e-commerce – Case Study A person buys a book (product) at Amazon.com. Task: Recommend other books (products) this person is likely to buy Amazon does clustering based on books bought: customers who bought “Advances in Knowledge Discovery and Data Mining”, also bought “Data Mining: Practical Machine Learning Tools and Techniques with Java Implementations” Recommendation program is quite successful

Unsuccessful e-commerce case study (KDD-Cup 2000) Data: clickstream and purchase data from Gazelle.com, legwear and legcare e-tailer Q: Characterize visitors who spend more than $12 on an average order at the site Dataset of 3,465 purchases, 1,831 customers Very interesting analysis by Cup participants thousands of hours - $X,000,000 (Millions) of consulting Total sales -- $Y,000 Obituary: Gazelle.com out of business, Aug 2000

Genomic Microarrays – Case Study Given microarray data for a number of samples (patients), can we Accurately diagnose the disease? Predict outcome for given treatment? Recommend best treatment?

Example: ALL/AML data 38 training cases, 34 test, ~ 7,000 genes 2 Classes: Acute Lymphoblastic Leukemia (ALL) vs Acute Myeloid Leukemia (AML) Use train data to build diagnostic model ALL AML Results on test data: 33/34 correct, 1 error may be mislabeled

Security and Fraud Detection - Case Study Credit Card Fraud Detection Detection of Money laundering FAIS (US Treasury) Securities Fraud NASDAQ KDD system Phone fraud AT&T, Bell Atlantic, British Telecom/MCI Bio-terrorism detection at Salt Lake Olympics 2002

Commercial Data Mining Software It has come a long way in the past seven or eight years According to IDC, data mining market size of $540M in 2002, $1.5B in 2005 Depends on what you call “data mining” Less of a focus towards applications as initially thought Instead, tool vendors slowly expanding capabilities Standardization XML CWM, PMML, GEML, Clinical Trial Data Model, … Web services? Integration Between applications Between database & application

What is Currently Happening? Consolidation Analytic companies rounding out existing product lines SPSS buys ISL, NetGenesis Analytic companies expanding beyond their niche SAS buys Intrinsic Enterprise software vendors buying analytic software companies Oracle buys Thinking Machines NCR buys Ceres Niche players are having a difficult time A lot of consulting Limited amount of outsourcing Digimine

Top Data Mining Vendors Today SAS 800 Pound Gorilla in the data analysis space SPSS Insightful (formerly Mathsoft/S-Plus) Well respected statistical tools, now moving into mining Oracle Integrated data mining into the database Angoss One of the first data mining applications (as opposed to tools) HNC Very specific analytic solutions Unica Great mining technology, focusing less on analytics these days

Standards In Data Mining Predictive Model Markup Language (PMML) The Data Mining Group (www.dmg.org) XML based (DTD) Java Data Mining API spec request (JSR-000073) Oracle, Sun, IBM, … Support for data mining APIs on J2EE platforms Build, manage, and score models programmatically OLE DB for Data Mining Microsoft Table based Incorporates PMML It takes more than an XML standard to get two applications to work together and make users more productive

Privacy Issues DM applications derive demographics about customers via – Credit card use – Store card – Subscription – Book, video, etc rental – and via more sources… As the DM results are deemed to be a good estimate or prediction, one has to be sensitive to the results not to violate privacy.

Final Comments Data Mining can be used in any organization that needs to find patterns or relationships in their data. DM analysts can have a reasonable level of assurance that their Data Mining efforts will render useful, repeatable, and valid results.

Resources and References Good overview book: Data Mining Techniques by Michael Berry and Gordon Linoff Web: Knowledge Discovery Nuggets http://www.kdnuggets.com (ref-tutorials) http://www.thearling.com (ref-tutorials) DataMine Mailing List majordomo@quality.org send message “subscribe datamine-l”

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