Big Data Reduction 3: From Descriptive to Prescriptive

Hello Larry,

Thank you for continuing the conversation.

And I appreciate the criticality. I should have some examples to clarify why prescriptive analytics should only guide decision making. The answer is really that the outcome is typically consist of many variables, that human still need to make the tradeoff. So let me try to illustrate what I meant with an example.

Say you have a prescriptive analytics system that takes social data and predicts some outcome based on certain actions you take to address your customers. You may be provided with 2 courses of action, and each one may lead to a series of outcome variables. For example:

1. Action 1 have a predicted outcome of: increase share of wallet by 20%, but lower customer loyalty (say increase churn by 5%)
2. Action 2 have a predicted outcome of: reduces the share of wallet by 20%, but will increase the frequency of purchase by 10%

So you, as a decision maker, would have to decide whether the increase churn of 5% is worth the 20% increase in share of wallet. In some industries the answer is definitely, but in industries where loyalty is very important and CLV is very high, then it may not be a good tradeoff. Blindly setting up rules for these tradeoff is usually not advisable. So prescriptive analytics gives you a view of the possible outcome based on your choice of action. But you have to still choose what actions to take.

I hope this address your concern.

Thank you again for your nice comment and think so highly of me. I appreciate your interest in my work. I do recognize that people take action socially. Sometimes people may do thing for no particular reason at all. That is why we are not trying to predict individual action. Rather we predict collective actions. The same can be said about any sociological principles as well. Homophily, how true is it? Is it true at the individual level? Do everyone of my friend really more similar to me socioeconomically than to someone I don't know. Probably not. But at the population level, there is a higher probability that is true. Same with social phenomena like triadic closure, etc. They are predictions about the collective behavior, not individual behaviors.

Anyway, thx for the discussion. 

I do hope that I will have the opportunities to engage you sometimes.

See you again on Lithosphere.