CFA CFA Level 1 Question of the Week – Quantitative Methods

Question of the Week – Quantitative Methods

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    • Avatar of AdaptPrepAdaptPrep
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        Which of the following methods can be used to overcome the data mining bias?

        • Test hundreds of variables for statistical significance
        • Use data sets created by previous research
        • Test the predictions on new data
      • Avatar of AdaptPrepAdaptPrep
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          If you test 100 variables for
          predictors with 95% confidence, you would expect 5 of those variables to appear
          as predictors even if there is no relationship with the data. The problem, not
          the solution, is that hundreds of variables are being tested for statistical
          significance. Another data mining issue (intergenerational data mining) can
          come about because a researcher uses another researcher’s data. A solution to
          both problems involves testing the conclusions
          on a new data set
          .

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