An Innovative Way to Predict Continuous Variables: From Regression to Classification

An Innovative Way to Predict Continuous Variables: From Regression to Classification

摘要

When it comes to the prediction of continuous variables, the first thing that comes to our mind is always the regression model. For instance, linear regression is the most commonly used regression model, and it has the benefits of simple implementation and high interpretability. On the other hand, random forest regression can handle missing data and is adaptive to interactions and nonlinearity. While these algorithms all work well for continuous target variables in different scenarios analytically, they provide less information on the predicted numbers’ confidence level, especially in real-world applications.

In this article, we will explore an unconventional framework to predict continuous variables with given confidence scores. Instead of framing the prediction as a regression problem, we twist the problem into a classification problem. This framework also allows us to have more visibility on the predicted results and can be adjustable to different confidence levels. The article will use revenue estimation as an example. Given a variety of business attributes for many businesses, we will illustrate how we can predict the revenue for each business given a specific confidence level.