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6 An outline of data mining methods This chapter introduces the five chapters which form the core technical content of this book. They are rather more accessible than some specialist books on statistics, data analysis and neural networks, and I hope that they will be enjoyable to read. However, a reader who is only interested in the applications of data mining and the procedures for implementing it in a business may omit these chapters. On the other hand, they are essential for anyone wishing not only to understand the working of the tools, in order to use them more successfully, but also to know when and where to use any particular algorithm. In this first technical chapter, I shall outline the descriptive and predictive methods of data mining and statistics as a whole, and compare their main features, which will be discussed in detail in the following chapters. It is important to note that the logarithms used in this book are Napierian (natural) logarithms in all cases. 6.1 Classification of the methods As mentioned in Chapter 1, the main data mining and data analysis methods can be divided into two large families: descriptive methods and predictive methods . In descriptive methods, for reducing, summarizing and grouping data, there is no dependent variable, i.e. no privileged variable. In predictive methods, which explain data, there is a dependent variable, in other words a variable to be explained, or a privileged variable. A more detailed version of this classification is shown in Table 6.1, where methods forming part of conventional statistics and data analysis have been given grey backgrounds. Considering predictive methods only (Table 6.2), we can be more precise by distinguish- ing the differences relating to the type of variable, namely independent (in the rows) and dependent (in the columns). Clearly, the rows ‘n quantitative (representing different q