# Blog Archives

## Data Mining Techniques

- Data Mining
- Crucial Concepts in Data Mining
- Data Warehousing
- On-Line Analytic Processing (OLAP)
- Exploratory Data Analysis (EDA) and Data Mining Techniques
- Neural Networks

## Data Mining

*Data Mining* is an analytic process designed to explore data (usually large amounts of data – typically business or market related – also known as “big data”) in search of consistent patterns and/or systematic relationships between variables, and then to validate the findings by applying the detected patterns to new subsets of data. The ultimate goal of data mining is prediction – and predictive data mining is the most common type of data mining and one that has the most direct business applications. The process of data mining consists of three stages: (1) the initial exploration, (2) model building or pattern identification with validation/verification, and (3) deployment (i.e., the application of the model to new data in order to generate predictions).

**Stage 1: Exploration.** This stage usually starts with data preparation which may involve cleaning data, data transformations, selecting subsets of records and – in case of data sets with large numbers of variables (“fields”) – performing some preliminary feature selection operations to bring the number of variables to a manageable range (depending on the statistical methods which are being considered). Then, depending on the nature of the analytic problem, this first stage of the process of data mining may involve anywhere between a simple choice of straightforward predictors for a regression model, to elaborate exploratory analyses using a wide variety of graphical and statistical methods (see *Exploratory Data Analysis (EDA)*) in order to identify the most relevant variables and determine the complexity and/or the general nature of models that can be taken into account in the next stage.

**Stage 2: Model building and validation.** This stage involves considering various models and choosing the best one based on their predictive performance (i.e., explaining the variability in question and producing stable results across samples). This may sound like a simple operation, but in fact, it sometimes involves a very elaborate process. There are a variety of techniques developed to achieve that goal – many of which are based on so-called “competitive evaluation of models,” that is, applying different models to the same data set and then comparing their performance to choose the best. These techniques – which are often considered the core of predictive data mining – include: Bagging (Voting, Averaging), Boosting, Stacking (Stacked Generalizations), and Meta-Learning.

**Stage 3: Deployment.** That final stage involves using the model selected as best in the previous stage and applying it to new data in order to generate predictions or estimates of the expected outcome.

The concept of *Data Mining* is becoming increasingly popular as a business information management tool where it is expected to reveal knowledge structures that can guide decisions in conditions of limited certainty. Recently, there has been increased interest in developing new analytic techniques specifically designed to address the issues relevant to business *Data Mining* (e.g., Classification Trees), but Data Mining is still based on the conceptual principles of statistics including the traditional Exploratory Data Analysis (EDA) and modeling and it shares with them both some components of its general approaches and specific techniques.

However, an important general difference in the focus and purpose between Data Mining and the traditional Exploratory Data Analysis (EDA) is that Data Mining is more oriented towards applications than the basic nature of the underlying phenomena. In other words, Data Mining is relatively less concerned with identifying the specific relations between the involved variables. For example, uncovering the nature of the underlying functions or the specific types of interactive, multivariate dependencies between variables are not the main goal of Data Mining. Instead, the focus is on producing a solution that can generate useful predictions. Therefore, Data Mining accepts among others a “black box” approach to data exploration or knowledge discovery and uses not only the traditional Exploratory Data Analysis (EDA) techniques, but also such techniques as *Neural Networks* which can generate valid predictions but are not capable of identifying the specific nature of the interrelations between the variables on which the predictions are based.

Data Mining is often considered to be “*a blend of statistics, AI (artificial intelligence), and data base research*” (Pregibon, 1997, p. 8), which until very recently was not commonly recognized as a field of interest for statisticians, and was even considered by some “*a dirty word in Statistics*” (Pregibon, 1997, p. 8). Due to its applied importance, however, the field emerges as a rapidly growing and major area (also in statistics) where important theoretical advances are being made (see, for example, the recent annual *International Conferences on Knowledge Discovery and Data Mining*, co-hosted by the *American Statistical Association*).

For information on Data Mining techniques, review the summary topics included below. There are numerous books that review the theory and practice of data mining; the following books offer a representative sample of recent general books on data mining, representing a variety of approaches and perspectives:

Berry, M., J., A., & Linoff, G., S., (2000). *Mastering data mining*. New York: Wiley.

Edelstein, H., A. (1999). *Introduction to data mining and knowledge discovery (3rd ed)*. Potomac, MD: Two Crows Corp.

Fayyad, U. M., Piatetsky-Shapiro, G., Smyth, P., & Uthurusamy, R. (1996). *Advances in knowledge discovery & data mining*. Cambridge, MA: MIT Press.

Han, J., Kamber, M. (2000). *Data mining: Concepts and Techniques*. New York: Morgan-Kaufman.

Hastie, T., Tibshirani, R., & Friedman, J. H. (2001). *The elements of statistical learning : Data mining, inference, and prediction*. New York: Springer.

Pregibon, D. (1997). *Data Mining*. Statistical Computing and Graphics, 7, 8.

Weiss, S. M., & Indurkhya, N. (1997). *Predictive data mining: A practical guide*. New York: Morgan-Kaufman.

Westphal, C., Blaxton, T. (1998). *Data mining solutions*. New York: Wiley.

Witten, I. H., & Frank, E. (2000). *Data mining*. New York: Morgan-Kaufmann.

## Crucial Concepts in Data Mining

**Bagging (Voting, Averaging)**

The concept of bagging (voting for classification, averaging for regression-type problems with continuous dependent variables of interest) applies to the area of predictive data mining, to combine the predicted classifications (prediction) from multiple models, or from the same type of model for different learning data. It is also used to address the inherent instability of results when applying complex models to relatively small data sets. Suppose your data mining task is to build a model for predictive classification, and the dataset from which to train the model (learning data set, which contains observed classifications) is relatively small. You could repeatedly sub-sample (with replacement) from the dataset, and apply, for example, a tree classifier (e.g., C&RT and CHAID) to the successive samples. In practice, very different trees will often be grown for the different samples, illustrating the instability of models often evident with small data sets. One method of deriving a single prediction (for new observations) is to use all trees found in the different samples, and to apply some simple voting: The final classification is the one most often predicted by the different trees. Note that some weighted combination of predictions (weighted vote, weighted average) is also possible, and commonly used. A sophisticated (machine learning) algorithm for generating weights for weighted prediction or voting is the Boosting procedure.

**Boosting**

The concept of boosting applies to the area of predictive data mining, to generate multiple models or classifiers (for prediction or classification), and to derive weights to combine the predictions from those models into a single prediction or predicted classification (see also Bagging).

A simple algorithm for boosting works like this: Start by applying some method (e.g., a tree classifier such as C&RT or CHAID) to the learning data, where each observation is assigned an equal weight. Compute the predicted classifications, and apply weights to the observations in the learning sample that are inversely proportional to the accuracy of the classification. In other words, assign greater weight to those observations that were difficult to classify (where the misclassification rate was high), and lower weights to those that were easy to classify (where the misclassification rate was low). In the context of C&RT for example, different misclassification costs (for the different classes) can be applied, inversely proportional to the accuracy of prediction in each class. Then apply the classifier again to the weighted data (or with different misclassification costs), and continue with the next iteration (application of the analysis method for classification to the re-weighted data).

Boosting will generate a sequence of classifiers, where each consecutive classifier in the sequence is an “expert” in classifying observations that were not well classified by those preceding it. During deployment (for prediction or classification of new cases), the predictions from the different classifiers can then be combined (e.g., via voting, or some weighted voting procedure) to derive a single best prediction or classification.

Note that boosting can also be applied to learning methods that do not explicitly support weights or misclassification costs. In that case, random sub-sampling can be applied to the learning data in the successive steps of the iterative boosting procedure, where the probability for selection of an observation into the subsample is inversely proportional to the accuracy of the prediction for that observation in the previous iteration (in the sequence of iterations of the boosting procedure).

**CRISP**

See Models for Data Mining.

**Data Preparation (in Data Mining)**

Data preparation and cleaning is an often neglected but extremely important step in the data mining process. The old saying “garbage-in-garbage-out” is particularly applicable to the typical data mining projects where large data sets collected via some automatic methods (e.g., via the Web) serve as the input into the analyses. Often, the method by which the data where gathered was not tightly controlled, and so the data may contain out-of-range values (e.g., Income: -100), impossible data combinations (e.g., Gender: Male, Pregnant: Yes), and the like. Analyzing data that has not been carefully screened for such problems can produce highly misleading results, in particular in predictive data mining.

**Data Reduction (for Data Mining)**

The term Data Reduction in the context of data mining is usually applied to projects where the goal is to aggregate or amalgamate the information contained in large datasets into manageable (smaller) information nuggets. Data reduction methods can include simple tabulation, aggregation (computing descriptive statistics) or more sophisticated techniques like clustering, principal components analysis, etc.

See also predictive data mining, drill-down analysis.

**Deployment**

The concept of deployment in predictive data mining refers to the application of a model for prediction or classification to new data. After a satisfactory model or set of models has been identified (trained) for a particular application, we usually want to deploy those models so that predictions or predicted classifications can quickly be obtained for new data. For example, a credit card company may want to deploy a trained model or set of models (e.g., neural networks, meta-learner) to quickly identify transactions which have a high probability of being fraudulent.

**Drill-Down Analysis**

The concept of drill-down analysis applies to the area of data mining, to denote the interactive exploration of data, in particular of large databases. The process of drill-down analyses begins by considering some simple break-downs of the data by a few variables of interest (e.g., Gender, geographic region, etc.). Various statistics, tables, histograms, and other graphical summaries can be computed for each group. Next, we may want to “drill-down” to expose and further analyze the data “underneath” one of the categorizations, for example, we might want to further review the data for males from the mid-west. Again, various statistical and graphical summaries can be computed for those cases only, which might suggest further break-downs by other variables (e.g., income, age, etc.). At the lowest (“bottom”) level are the raw data: For example, you may want to review the addresses of male customers from one region, for a certain income group, etc., and to offer to those customers some particular services of particular utility to that group.

**Feature Selection**

One of the preliminary stage in predictive data mining, when the data set includes more variables than could be included (or would be efficient to include) in the actual model building phase (or even in initial exploratory operations), is to select predictors from a large list of candidates. For example, when data are collected via automated (computerized) methods, it is not uncommon that measurements are recorded for thousands or hundreds of thousands (or more) of predictors. The standard analytic methods for predictive data mining, such as neural network analyses, classification and regression trees, generalized linear models, or general linear models become impractical when the number of predictors exceed more than a few hundred variables.

Feature selection selects a subset of predictors from a large list of candidate predictors without assuming that the relationships between the predictors and the dependent or outcome variables of interest are linear, or even monotone. Therefore, this is used as a pre-processor for predictive data mining, to select manageable sets of predictors that are likely related to the dependent (outcome) variables of interest, for further analyses with any of the other methods for regression and classification.

**Machine Learning**

Machine learning, computational learning theory, and similar terms are often used in the context of Data Mining, to denote the application of generic model-fitting or classification algorithms for predictive data mining. Unlike traditional statistical data analysis, which is usually concerned with the estimation of population parameters by statistical inference, the emphasis in data mining (and machine learning) is usually on the accuracy of prediction (predicted classification), regardless of whether or not the “models” or techniques that are used to generate the prediction is interpretable or open to simple explanation. Good examples of this type of technique often applied to predictive data mining are neural networks or meta-learning techniques such as boosting, etc. These methods usually involve the fitting of very complex “generic” models, that are not related to any reasoning or theoretical understanding of underlying causal processes; instead, these techniques can be shown to generate accurate predictions or classification in crossvalidation samples.

**Meta-Learning**

The concept of meta-learning applies to the area of predictive data mining, to combine the predictions from multiple models. It is particularly useful when the types of models included in the project are very different. In this context, this procedure is also referred to as Stacking (Stacked Generalization).

Suppose your data mining project includes tree classifiers, such as C&RT and CHAID, linear discriminant analysis (e.g., see GDA), and Neural Networks. Each computes predicted classifications for a crossvalidation sample, from which overall goodness-of-fit statistics (e.g., misclassification rates) can be computed. Experience has shown that combining the predictions from multiple methods often yields more accurate predictions than can be derived from any one method (e.g., see Witten and Frank, 2000). The predictions from different classifiers can be used as input into a meta-learner, which will attempt to combine the predictions to create a final best predicted classification. So, for example, the predicted classifications from the tree classifiers, linear model, and the neural network classifier(s) can be used as input variables into a neural network meta-classifier, which will attempt to “learn” from the data how to combine the predictions from the different models to yield maximum classification accuracy.

We can apply meta-learners to the results from different meta-learners to create “meta-meta”-learners, and so on; however, in practice such exponential increase in the amount of data processing, in order to derive an accurate prediction, will yield less and less marginal utility.

**Models for Data Mining**

In the business environment, complex data mining projects may require the coordinate efforts of various experts, stakeholders, or departments throughout an entire organization. In the data mining literature, various “general frameworks” have been proposed to serve as blueprints for how to organize the process of gathering data, analyzing data, disseminating results, implementing results, and monitoring improvements.

One such model, CRISP (Cross-Industry Standard Process for data mining) was proposed in the mid-1990s by a European consortium of companies to serve as a non-proprietary standard process model for data mining. This general approach postulates the following (perhaps not particularly controversial) general sequence of steps for data mining projects:

Another approach – the Six Sigma methodology – is a well-structured, data-driven methodology for eliminating defects, waste, or quality control problems of all kinds in manufacturing, service delivery, management, and other business activities. This model has recently become very popular (due to its successful implementations) in various American industries, and it appears to gain favor worldwide. It postulated a sequence of, so-called, DMAIC steps –

– that grew up from the manufacturing, quality improvement, and process control traditions and is particularly well suited to production environments (including “production of services,” i.e., service industries).

Another framework of this kind (actually somewhat similar to Six Sigma) is the approach proposed by SAS Institute called SEMMA –

– which is focusing more on the technical activities typically involved in a data mining project.

All of these models are concerned with the process of how to integrate data mining methodology into an organization, how to “convert data into information,” how to involve important stake-holders, and how to disseminate the information in a form that can easily be converted by stake-holders into resources for strategic decision making.

Some software tools for data mining are specifically designed and documented to fit into one of these specific frameworks.

The general underlying philosophy of StatSoft’s *STATISTICA* Data Miner is to provide a flexible data mining workbench that can be integrated into any organization, industry, or organizational culture, regardless of the general data mining process-model that the organization chooses to adopt. For example, *STATISTICA* Data Miner can include the complete set of (specific) necessary tools for ongoing company wide Six Sigma quality control efforts, and users can take advantage of its (still optional) DMAIC-centric user interface for industrial data mining tools. It can equally well be integrated into ongoing marketing research, CRM (Customer Relationship Management) projects, etc. that follow either the CRISP or SEMMA approach – it fits both of them perfectly well without favoring either one. Also, *STATISTICA* Data Miner offers all the advantages of a general data mining oriented “development kit” that includes easy to use tools for incorporating into your projects not only such components as custom database gateway solutions, prompted interactive queries, or proprietary algorithms, but also systems of access privileges, workgroup management, and other collaborative work tools that allow you to design large scale, enterprise-wide systems (e.g., following the CRISP, SEMMA, or a combination of both models) that involve your entire organization.

**Predictive Data Mining**

The term Predictive Data Mining is usually applied to identify data mining projects with the goal to identify a statistical or neural network model or set of models that can be used to predict some response of interest. For example, a credit card company may want to engage in predictive data mining, to derive a (trained) model or set of models (e.g., neural networks, meta-learner) that can quickly identify transactions which have a high probability of being fraudulent. Other types of data mining projects may be more exploratory in nature (e.g., to identify cluster or segments of customers), in which case drill-down descriptive and exploratory methods would be applied. Data reduction is another possible objective for data mining (e.g., to aggregate or amalgamate the information in very large data sets into useful and manageable chunks).

**SEMMA**

See Models for Data Mining.

**Stacked Generalization **

See Stacking.

**Stacking (Stacked Generalization)**

The concept of stacking (Stacked Generalization) applies to the area of predictive data mining, to combine the predictions from multiple models. It is particularly useful when the types of models included in the project are very different.

Suppose your data mining project includes tree classifiers, such as C&RT or CHAID, linear discriminant analysis (e.g., see GDA), and *Neural Networks*. Each computes predicted classifications for a crossvalidation sample, from which overall goodness-of-fit statistics (e.g., misclassification rates) can be computed. Experience has shown that combining the predictions from multiple methods often yields more accurate predictions than can be derived from any one method (e.g., see Witten and Frank, 2000). In stacking, the predictions from different classifiers are used as input into a meta-learner, which attempts to combine the predictions to create a final best predicted classification. So, for example, the predicted classifications from the tree classifiers, linear model, and the neural network classifier(s) can be used as input variables into a neural network meta-classifier, which will attempt to “learn” from the data how to combine the predictions from the different models to yield maximum classification accuracy.

Other methods for combining the prediction from multiple models or methods (e.g., from multiple datasets used for learning) are Boosting and Bagging (Voting).

**Text Mining**

While *Data Mining* is typically concerned with the detection of patterns in numeric data, very often important (e.g., critical to business) information is stored in the form of text. Unlike numeric data, text is often amorphous, and difficult to deal with. Text mining generally consists of the analysis of (multiple) text documents by extracting key phrases, concepts, etc. and the preparation of the text processed in that manner for further analyses with numeric data mining techniques (e.g., to determine co-occurrences of concepts, key phrases, names, addresses, product names, etc.).

**Voting**

See Bagging.

## Data Warehousing

StatSoft defines *data warehousing* as a process of organizing the storage of large, multivariate data sets in a way that facilitates the retrieval of information for analytic purposes.

The most efficient data warehousing architecture will be capable of incorporating or at least referencing all data available in the relevant enterprise-wide information management systems, using designated technology suitable for corporate data base management (e.g., *Oracle*, *Sybase*, *MS SQL Server*. Also, a flexible, high-performance (see the IDP technology), open architecture approach to data warehousing – that flexibly integrates with the existing corporate systems and allows the users to organize and efficiently reference for analytic purposes enterprise repositories of data of practically any complexity – is offered in StatSoft enterprise systems such as *STATISTICA Enterprise* and *STATISTICA Enterprise/QC* , which can also work in conjunction with *STATISTICA Data Miner* and *STATISTICA Enterprise Server*.

## On-Line Analytic Processing (OLAP)

The term *On-Line Analytic Processing* – *OLAP* (or *Fast Analysis of Shared Multidimensional Information* – *FASMI*) refers to technology that allows users of multidimensional databases to generate on-line descriptive or comparative summaries (“views”) of data and other analytic queries. Note that despite its name, analyses referred to as *OLAP* do not need to be performed truly “on-line” (or in real-time); the term applies to analyses of multidimensional databases (that may, obviously, contain dynamically updated information) through efficient “multidimensional” queries that reference various types of data. *OLAP* facilities can be integrated into corporate (enterprise-wide) database systems and they allow analysts and managers to monitor the performance of the business (e.g., such as various aspects of the manufacturing process or numbers and types of completed transactions at different locations) or the market. The final result of *OLAP* techniques can be very simple (e.g., frequency tables, descriptive statistics, simple cross-tabulations) or more complex (e.g., they may involve seasonal adjustments, removal of outliers, and other forms of cleaning the data). Although Data Mining techniques can operate on any kind of unprocessed or even unstructured information, they can also be applied to the data views and summaries generated by *OLAP* to provide more in-depth and often more multidimensional knowledge. In this sense, Data Mining techniques could be considered to represent either a different analytic approach (serving different purposes than *OLAP*) or as an analytic extension of *OLAP*.

## Exploratory Data Analysis (EDA)

### EDA vs. Hypothesis Testing

As opposed to traditional *hypothesis testing* designed to verify *a priori* hypotheses about relations between variables (e.g., *“There is a positive correlation between the AGE of a person and his/her RISK TAKING disposition”*), *exploratory data analysis (EDA)* is used to identify systematic relations between variables when there are no (or not complete) *a priori* expectations as to the nature of those relations. In a typical exploratory data analysis process, many variables are taken into account and compared, using a variety of techniques in the search for systematic patterns.

### Computational EDA techniques

Computational exploratory data analysis methods include both simple basic statistics and more advanced, designated multivariate exploratory techniques designed to identify patterns in multivariate data sets.

**Basic statistical exploratory methods.** The basic statistical exploratory methods include such techniques as examining distributions of variables (e.g., to identify highly skewed or non-normal, such as bi-modal patterns), reviewing large correlation matrices for coefficients that meet certain thresholds (see example above), or examining multi-way frequency tables (e.g., “slice by slice” systematically reviewing combinations of levels of control variables).

**Multivariate exploratory techniques.** Multivariate exploratory techniques designed specifically to identify patterns in multivariate (or univariate, such as sequences of measurements) data sets include: Cluster Analysis, Factor Analysis, Discriminant Function Analysis, Multidimensional Scaling, Log-linear Analysis, Canonical Correlation, Stepwise Linear and Nonlinear (e.g., Logit) Regression, Correspondence Analysis, Time Series Analysis, and Classification Trees.

**Neural Networks.** *Neural Networks* are analytic techniques modeled after the (hypothesized) processes of learning in the cognitive system and the neurological functions of the brain and capable of predicting new observations (on specific variables) from other observations (on the same or other variables) after executing a process of so-called learning from existing data.

For more information, see Neural Networks; see also *STATISTICA Neural Networks*.

### Graphical (Data Visualization) EDA Techniques

A large selection of powerful exploratory data analytic techniques is also offered by graphical data visualization methods that can identify relations, trends, and biases “hidden”* *in unstructured data sets.

**Brushing.** Perhaps the most common and historically first widely used technique explicitly identified as *graphical exploratory data analysis* is *brushing*, an interactive method allowing us to select on-screen specific data points or subsets of data and identify their (e.g., common) characteristics, or to examine their effects on relations between relevant variables. Those relations between variables can be visualized by fitted functions (e.g., 2D lines or 3D surfaces) and their confidence intervals, thus, for example, we can examine changes in those functions by interactively (temporarily) removing or adding specific subsets of data. For example, one of many applications of the brushing technique is to select (i.e., highlight) in a matrix scatterplot all data points that belong to a certain category (e.g., a “medium” income level, see the highlighted subset in the fourth component graph of the first row in the illustration left) in order to examine how those specific observations contribute to relations between other variables in the same data set (e.g, the correlation between the “debt” and “assets” in the current example). If the brushing facility supports features such as “animated brushing” or “automatic function re-fitting,” we can define a dynamic brush that would move over the consecutive ranges of a criterion variable (e.g., “income” measured on a continuous scale or a discrete [3-level] scale as on the illustration above) and examine the dynamics of the contribution of the criterion variable to the relations between other relevant variables in the same data set.

**Other graphical EDA techniques.** Other graphical exploratory analytic techniques include function fitting and plotting, data smoothing, overlaying and merging of multiple displays, categorizing data, splitting/merging subsets of data in graphs, aggregating data in graphs, identifying and marking subsets of data that meet specific conditions, icon plots,

shading, plotting confidence intervals and confidence areas (e.g., ellipses),

generating tessellations, spectral planes,

integrated layered compressions,

and projected contours, data image reduction techniques, interactive (and continuous) rotation

with animated stratification (cross-sections) of 3D displays, and selective highlighting of specific series and blocks of data.

### Verification of Results of EDA

The exploration of data can only serve as the first stage of data analysis and its results can be treated as tentative at best as long as they are not confirmed, e.g., crossvalidated, using a different data set (or an independent subset). If the result of the exploratory stage suggests a particular model, then its validity can be verified by applying it to a new data set and testing its fit (e.g., testing its *predictive validity*). Case selection conditions can be used to quickly define subsets of data (e.g., for estimation and verification), and for testing the robustness of results.

## Neural Networks

(see also, the Neural Networks topic)

*Neural Networks* are analytic techniques modeled after the (hypothesized) processes of learning in the cognitive system and the neurological functions of the brain and capable of predicting new observations (on specific variables) from other observations (on the same or other variables) after executing a process of so-called *learning* from existing data. Neural Networks is one of the Data Mining techniques.

The first step is to design a specific network architecture (that includes a specific number of “layers” each consisting of a certain number of “neurons”). The size and structure of the network needs to match the nature (e.g., the formal complexity) of the investigated phenomenon. Because the latter is obviously not known very well at this early stage, this task is not easy and often involves multiple “trials and errors.” (Now, there is, however, neural network software that applies artificial intelligence techniques to aid in that tedious task and finds “the best” network architecture.)

The new network is then subjected to the process of “training.” In that phase, neurons apply an iterative process to the number of inputs (variables) to adjust the weights of the network in order to optimally predict (in traditional terms, we could say find a “fit” to) the sample data on which the “training” is performed. After the phase of learning from an existing data set, the new network is ready and it can then be used to generate predictions.

The resulting *“network”* developed in the process of *“learning”* represents a pattern detected in the data. Thus, in this approach, the *“network”* is the functional equivalent of a model of relations between variables in the traditional *model building* approach. However, unlike in the traditional *models*, in the *“network,”* those relations cannot be articulated in the usual terms used in statistics or methodology to describe relations between variables (such as, for example, *“A is positively correlated with B but only for observations where the value of C is low and D is high”*). Some *neural networks* can produce highly accurate predictions; they represent, however, a typical a-theoretical (one can say, “a black box”) research approach. That approach is concerned only with practical considerations, that is, with the predictive validity of the solution and its applied relevance and not with the nature of the underlying mechanism or its relevance for any “theory” of the underlying phenomena.

However, it should be mentioned that *Neural Network* techniques can also be used as a component of analyses designed to build explanatory models because *Neural Networks* can help explore data sets in search for relevant variables or groups of variables; the results of such explorations can then facilitate the process of model building. Moreover, now there is neural network software that uses sophisticated algorithms to search for the most relevant input variables, thus potentially contributing directly to the model building process.

One of the major advantages of *neural networks* is that, theoretically, they are capable of approximating any continuous function, and thus the researcher does not need to have any hypotheses about the underlying model, or even to some extent, which variables matter. An important disadvantage, however, is that the final solution depends on the initial conditions of the network, and, as stated before, it is virtually impossible to “interpret” the solution in traditional, analytic terms, such as those used to build theories that explain phenomena.

Some authors stress the fact that *neural networks* use, or we should say are expected to use, massively parallel computation models. For example Haykin (1994) defines *neural network* as:

“a massively parallel distributed processor that has a natural propensity for storing experiential knowledge and making it available for use. It resembles the brain in two respects: (1) Knowledge is acquired by the network through a learning process, and (2) Interneuron connection strengths known as synaptic weights are used to store the knowledge.”(p. 2).

However, as Ripley (1996) points out, the vast majority of contemporary neural network applications run on single-processor computers and he argues that a large speed-up can be achieved not only by developing software that will take advantage of multiprocessor hardware by also by designing better (more efficient) learning algorithms.

*Neural networks* is one of the methods used in Data Mining; see also Exploratory Data Analysis. For more information on *neural networks*, see Haykin (1994), Masters (1995), Ripley (1996), and Welstead (1994). For a discussion of *neural networks* as statistical tools, see Warner and Misra (1996). See also, *STATISTICA Neural Networks*.

## STATISTICA Multivariate Exploratory Techniques

* STATISTICA* Multivariate Exploratory Techniques offers a broad selection of exploratory techniques, from cluster analysis to advanced classification trees methods, with an endless array of interactive visualization tools for exploring relationships and patterns; built-in complete Visual Basic scripting.

- Cluster Analysis Techniques
- Factor Analysis
- Principal Components & Classification Analysis
- Canonical Correlation Analysis
- Reliability/Item Analysis
- Classification Trees
- Correspondence Analysis
- Multidimensional Scaling
- Discriminant Analysis
- General Discriminant Analysis Models (
*GDA*)

**Details**

## Cluster Analysis

This module includes a comprehensive implementation of clustering methods (*k*-means, hierarchical clustering, two-way joining). The program can process data from either raw data files or matrices of distance measures. The user can cluster cases, variables, or both based on a wide variety of distance measures (including Euclidean, squared Euclidean, City-block (Manhattan), Chebychev, Power distances, Percent disagreement, and *1-r*) and amalgamation/linkage rules (including single, complete, weighted and unweighted group average or centroid, Ward’s method, and others). Matrices of distances can be saved for further analysis with other modules of the * STATISTICA* system. In *k*-means clustering, the user has full control over the initial cluster centers. Extremely large analysis designs can be processed; for example, hierarchical (tree) joining can analyze matrices with over 1,000 variables, or with over 1 million distances. In addition to the standard cluster analysis output, a comprehensive set of descriptive statistics and extended diagnostics (e.g., the complete amalgamation schedule with cohesion levels in hierarchical clustering, the ANOVA table in *k*-means clustering) is available. Cluster membership data can be appended to the current data file for further processing. Graphics options in the *Cluster Analysis* module include customizable tree diagrams, discrete contour-style two-way joining matrix plots, plots of amalgamation schedules, plots of means in *k*-means clustering, and many others.

## Factor Analysis

The *Factor Analysis* module contains a wide range of statistics and options, and provides a comprehensive implementation of factor (and hierarchical factor) analytic techniques with extended diagnostics and a wide variety of analytic and exploratory graphs. It will perform principal components, common, and hierarchical (oblique) factor analysis, and can handle extremely large analysis problems (e.g., with thousands of variables). Confirmatory factor analysis (as well as path analysis) can also be performed via the *Structural Equation Modeling and Path Analysis (SEPATH)* module found in * STATISTICA Advanced Linear/Non-Linear Models*.

## Principal Components & Classification Analysis

* STATISTICA* also includes a designated program for principal components and classification analysis. The output includes eigenvalues (regular, cumulative, relative), factor loadings, factor scores (which can be appended to the input data file, reviewed graphically as icons, and interactively recoded), and a number of more technical statistics and diagnostics. Available rotations include Varimax, Equimax, Quartimax, Biquartimax (either normalized or raw), and Oblique rotations. The factorial space can be plotted and reviewed “slice by slice” in either 2D or 3D scatterplots with labeled variable-points; other integrated graphs include Scree plots, various scatterplots, bar and line graphs, and others. After a factor solution is determined, the user can recalculate (i.e., reconstruct) the correlation matrix from the respective number of factors to evaluate the fit of the factor model. Both raw data files and matrices of correlations can be used as input. Confirmatory factor analysis and other related analyses can be performed with the * Structural Equation Modeling and Path Analysis (SEPATH)* module available in *STATISTICA Advanced Linear/Non-Linear Models*, where a designated *Confirmatory Factor Analysis Wizard* will guide you step by step through the process of specifying the model.

## Canonical Correlation Analysis

This module offers a comprehensive implementation of canonical analysis procedures; it can process raw data files or correlation matrices and it computes all of the standard canonical correlation statistics (including eigenvectors, eigenvalues, redundancy coefficients, canonical weights, loadings, extracted variances, significance tests for each root, etc.) and a number of extended diagnostics. The scores of canonical variates can be computed for each case, appended to the data file, and visualized via integrated icon plots. The *Canonical Analysis* module also includes a variety of integrated graphs (including plots of eigenvalues, canonical correlations, scatterplots of canonical variates, and many others). Note that confirmatory analyses of structural relationships between latent variables can also be performed via the *SEPATH (Structural Equation Modeling and Path Analysis)* module in * STATISTICA Advanced Linear/Non-Linear Models*. Advanced stepwise and best-subset selection of predictor variables for MANOVA/MANCOVA designs (with multiple dependent variables) is available in the *General Regression Models (GRM)* module in *STATISTICA Advanced Linear/Non-Linear Models*.

## Reliability/Item Analysis

This module includes a comprehensive selection of procedures for the development and evaluation of surveys and questionnaires. As in all other modules of *STATISTICA*, extremely large designs can be analyzed. The user can calculate reliability statistics for all items in a scale, interactively select subsets, or obtain comparisons between subsets of items via the “split-half” (or split-part) method. In a single run, the user can evaluate the reliability of a sum-scale as well as subscales. When interactively deleting items, the new reliability is computed instantly without processing the data file again. The output includes correlation matrices and descriptive statistics for items, Cronbach * alpha*, the standardized *alpha*, the average inter-item correlation, the complete ANOVA table for the scale, the complete set of item-total statistics (including multiple item-total *R*‘s), the split-half reliability, and the correlation between the two halves corrected for attenuation. A selection of graphs (including various integrated scatterplots, histograms, line plots and other plots) and a set of interactive * what-if* procedures are provided to aid in the development of scales. For example, the user can calculate the expected reliability after adding a particular number of items to the scale, and can estimate the number of items that would have to be added to the scale in order to achieve a particular reliability. Also, the user can estimate the correlation corrected for attenuation between the current scale and another measure (given the reliability of the current scale).

## Classification Trees

*STATISTICA’s Classification Trees* module provides a comprehensive implementation of the most recently developed algorithms for efficiently producing and testing the robustness of classification trees (a classification tree is a rule for predicting the class of an object from the values of its predictor variables). *STATISTICA Data Miner* offers additional advanced methods for tree classifications such as * Boosted Trees, Random Forests, General Classification and Regression Tree Models (GTrees)* and *General CHAID (Chi-square Automatic Interaction Detection)* models facilities. Classification trees can be produced using categorical predictor variables, ordered predictor variables, or both, and using univariate splits or linear combination splits.

Analysis options include performing exhaustive splits or discriminant-based splits; unbiased variable selection (as in *QUEST*); direct stopping rules (as in *FACT*) or bottom-up pruning (as in *C&RT*); pruning based on misclassification rates or on the deviance function; generalized *Chi-square, G-square,* or *Gini*-index goodness of fit measures. Priors and misclassification costs can be specified as equal, estimated from the data, or user-specified. The user can also specify the v value for v-fold cross-validation during tree building, *v* value for * v*-fold cross-validation for error estimation, size of the SE rule, minimum node size before pruning, seeds for random number generation, and *alpha* value for variable selection. Integrated graphics options are provided to explore the input and output data.

## Correspondence Analysis

This module features a full implementation of simple and multiple correspondence analysis techniques, and can analyze even extremely large tables. The program will accept input data files with grouping (coding) variables that are to be used to compute the crosstabulation table, data files that contain frequencies (or some other measure of correspondence, association, similarity, confusion, etc.) and coding variables that identify (enumerate) the cells in the input table, or data files with frequencies (or other measure of correspondence) only (e.g., the user can directly type in and analyze a frequency table). For multiple correspondence analysis, the user can also directly specify a *Burt* table as input for the analysis. The program will compute various tables, including the table of row percentages, column percentages, total percentages, expected values, observed minus expected values, standardized deviates, and contributions to the *Chi-square* values. The *Correspondence Analysis* module will compute the generalized eigenvalues and eigenvectors, and report all standard diagnostics including the singular values, eigenvalues, and proportions of inertia for each dimension. The user can either manually choose the number of dimensions, or specify a cutoff value for the maximum cumulative percent of inertia. The program will compute the standard coordinate values for column and row points. The user has the choice of row-profile standardization, column-profile standardization, row and column profile standardization, or canonical standardization. For each dimension and row or column point, the program will compute the inertia, quality, and cosine-square values. In addition, the user can display (in spreadsheets) the matrices of the generalized singular vectors; like the values in all spreadsheets, these matrices can be accessed via *STATISTICA* Visual Basic, for example, in order to implement non-standard methods of computing the coordinates. The user can compute coordinate values and related statistics (quality and cosine-square values) for supplementary points (row or column), and compare the results with the regular row and column points. Supplementary points can also be specified for multiple correspondence analysis. In addition to the 3D histograms that can be computed for all tables, the user can produce a line plot for the eigenvalues, and 1D, 2D, and 3D plots for the row or column points. Row and column points can also be combined in a single graph, along with any supplementary points (each type of point will use a different color and point marker, so the different types of points can easily be identified in the plots). All points are labeled, and an option is available to truncate the names for the points to a user-specified number of characters.

## Multidimensional Scaling

The *Multidimensional Scaling* module includes a full implementation of (nonmetric) multidimensional scaling. Matrices of similarities, dissimilarities, or correlations between variables (i.e., “objects” or cases) can be analyzed. The starting configuration can be computed by the program (via principal components analysis) or specified by the user. The program employs an iterative procedure to minimize the stress value and the coefficient of alienation. The user can monitor the iterations and inspect the changes in these values. The final configurations can be reviewed via spreadsheets, and via 2D and 3D scatterplots of the dimensional space with labeled item-points. The output includes the values for the raw stress (raw *F*), Kruskal stress coefficient *S*, and the coefficient of alienation. The goodness of fit can be evaluated via Shepard diagrams (with *d-hats* and *d-stars*). Like all other results in *STATISTICA*, the final configuration can be saved to a data file.

## Discriminant Analysis

The *Discriminant Analysis* module is a full implementation of multiple stepwise discriminant function analysis. * STATISTICA* also includes the * General Discriminant Analysis Models* module (below) for fitting ANOVA/ANCOVA-like designs to categorical dependent variables, and to perform various advanced types of analyses (e.g., best subset selection of predictors, profiling of posterior probabilities, etc.). The * Discriminant Analysis* program will perform forward or backward stepwise analyses, or enter user-specified blocks of variables into the model.

In addition to the numerous graphics and diagnostics describing the discriminant functions, the program also provides a wide range of options and statistics for the classification of *old* or * new* cases (for validation of the model). The output includes the respective Wilks’ *lambdas*, partial *lambdas, F* to enter (or remove), the *p* levels, the tolerance values, and the *R*-square. The program will perform a full canonical analysis and report the raw and cumulative eigenvalues for all roots, and their *p* levels, the raw and standardized discriminant (canonical) function coefficients, the structure coefficient matrix (of factor loadings), the means for the discriminant functions, and the discriminant scores for each case (which can also be automatically appended to the data file). Integrated graphs include histograms of the canonical scores within each group (and all groups combined), special scatterplots for pairs of canonical variables (where group membership of individual cases is visibly marked), a comprehensive selection of categorized (multiple) graphs allowing the user to explore the distribution and relations between dependent variables across the groups (including multiple box-and-whisker plots, histograms, scatterplots, and probability plots), and many others. The * Discriminant Analysis* module will also compute the standard classification functions for each group. The classification of cases can be reviewed in terms of Mahalanobis distances, *posterior* probabilities, or actual classifications, and the scores for individual cases can be visualized via exploratory icon plots and other multidimensional graphs integrated directly with the results spreadsheets. All of these values can be automatically appended to the current data file for further analyses. The summary classification matrix of the number and percent of correctly classified cases can also be displayed. The user has several options to specify the *a priori* classification probabilities and can specify selection conditions to include or exclude selected cases from the classification (e.g., to validate the classification functions in a new sample).

## General Discriminant Analysis Models (GDA)

The * STATISTICA General Discriminant Analysis (GDA)* module is an application and extension of the * General Linear Model* to classification problems. Like the * Discriminant Analysis* module, * GDA* allows you to perform standard and stepwise discriminant analyses. *GDA* implements the discriminant analysis problem as a special case of the general linear model, and thereby offers extremely useful analytic techniques that are innovative, efficient, and extremely powerful. As in traditional discriminant analysis, *GDA* allows you to specify a categorical dependent variable. For the analysis, the group membership (with regard to the dependent variable) is then coded into indicator variables, and all methods of *GRM* can be applied. In the results dialogs, the extensive selection of residual statistics of *GRM* and *GLM* are available in *GDA* as well. *GDA* provides powerful and efficient tools for data mining as well as applied research. *GDA* will compute all standard results for discriminant analysis, including discriminant function coefficients, canonical analysis results (standardized and raw coefficients, step-down tests of canonical roots, etc.), classification statistics (including Mahalanobis distances, posterior probabilities, actual classification of cases in the analysis sample and validation sample, misclassification matrix, etc.), and so on.

** Computational approach and unique applications.** As in traditional discriminant analysis, *GDA* allows you to specify a categorical dependent variable. For the analysis, the group membership (with regard to the dependent variable) is then coded into indicator variables, and all methods of *GRM* can be applied. In the results dialogs, the extensive selection of residual statistics of *GRM* and *GLM* are available in GDA as well; for example, you can review all the regression-like residuals and predicted values for each group (each coded dependent indicator variable), and choose from the large number of residual plots. In addition, all specialized prediction and classification statistics are computed that are commonly reviewed in a discriminant analysis; but those statistics can be reviewed in innovate ways because of * STATISTICA’s* unique approach. For example, you can perform “desirability profiling” by combining the posterior prediction probabilities for the groups into a desirability score, and then let the program find the values or combination of categorical predictor settings that will optimize that score. Thus, *GDA* provides powerful and efficient tools for data mining as well as applied research; for example, you could use the *DOE (Design of Experiments)* methods to generate an experimental design for quality improvement, apply this design to categorical outcome data (e.g., distinct classifications of an outcome as “superior,” “acceptable,” or “failed”), and then model the posterior prediction probabilities of those outcomes using the variables of your experimental design.

** Standard discriminant analysis results.** *STATISTICA GDA* will compute all standard results for discriminant analysis, including discriminant function coefficients, canonical analysis results (standardized and raw coefficients, step-down tests of canonical roots, etc.), classification statistics (including Mahalanobis distances, posterior probabilities, actual classification of cases in the analysis sample and validation sample, misclassification matrix, etc.), and so on.

** Unique features of GDA, currently only available in STATISTICA.** In addition,

*STATISTICA GDA*includes numerous unique features and results:

* Specifying predictor variables and effects; model building:*

1. Support for continuous and categorical predictors, instead of allowing only continuous predictors in the analysis (the common limitation in traditional discriminant function analysis programs), GDA allows the user to specify simple and complex ANOVA and ANCOVA-like designs, e.g., mixtures of continuous and categorical predictors, polynomial (response surface) designs, factorial designs, nested designs, etc.

2. Multiple-degree of freedom effects in stepwise selection; the terms that make up the predictor set (consisting not only of single-degree of freedom continuous predictors, but also multiple-degree of freedom effects) can be used in stepwise discriminant function analyses; multiple-degree of freedom effects will always be entered/removed as blocks.

3. Best subset selection of predictor effects; single- and multiple-degree of freedom effects can be specified for best-subset discriminant analysis; the program will select the effects (up to a user-specified number of effects) that produce the best discrimination between groups.

4. Selection of predictor effects based on misclassification rates; *GDA* allows the user to perform model building (selection of predictor effects) not only based on traditional criteria (e.g., p-to-enter/remove; Wilks’ lambda), but also based on misclassification rates; in other words the program will select those predictor effects that maximize the accuracy of classification, either for those cases from which the parameter estimates were computed, or for a cross-validation sample (to guard against over-fitting); these techniques elevate *GDA* to the level of a fast neural-network-like data mining tool for classification, that can be used as an alternative to other similar techniques (tree-classifiers, designated neural-network methods, etc.; *GDA* will tend to be faster than those techniques because it is still based on the more efficient *General Linear Model*).

* Results statistics; profiling:*

1. Detailed results and diagnostic statistics and plots; in addition to the standard results statistics, * GDA* provides a large number of auxiliary information to help the user judge the adequacy of the chosen disciminant analysis model (descriptive statistics and graphs, Mahalanobis distances, Cook distances, and leverages for predictors, etc.). 2. Profiling of expected classification; *GDA* includes an adaptation of the general *GLM (GRM)* response profiler; these options allow the user to quickly determine the values (or levels) of the predictor variables that maximize the posterior classification probability for a single group, or for a set of groups in the analyses; in a sense, the user can quickly determine the typical profiles of values of the predictors (or levels of categorical predictors) that identify a group (or set of groups) in the analysis.

* A note of caution for models with categorical predictors, and other advanced techniques.* The *General Discriminant Analysis* module provides functionality that makes this technique a general tool for classification and data mining. However, most — if not all — textbook treatments of discriminant function analysis are limited to simple and stepwise analyses with single degree of freedom continuous predictors. No “experience” (in the literature) exists regarding issues of robustness and effectiveness of these techniques, when they are generalized in the manner provided in this very powerful module. The use of best-subset methods, in particular when used in conjunction with categorical predictors or when using the misclassification rates in a crossvalidation sample for choosing the best subset of predictors, should be considered a heuristic search method, rather than a statistical analysis technique.

**System Requirements**

* STATISTICA Multivariate Exploratory Techniques * is compatible with Windows XP, Windows Vista, and Windows 7.

## Minimum System Requirements

- Operating System: Windows XP or above
- RAM: 256 MB
- Processor Speed: 500 MHz

## Recommended System Requirements

- Operating System: Windows XP or above
- RAM: 1 GB
- Processor Speed: 2.0 GHz

Native 64-bit versions and highly optimized multiprocessor versions are available.