Data Mining For Business Intelligence: Concepts, Techniques, and Applications in Microsoft Office Excel® with XLMiner®, Second Edition

Chapter 4. Dimension Reduction

In this chapter we describe the important step of dimension reduction. The dimension of a dataset, which is the number of variables, must be reduced for the data mining algorithms to operate efficiently. We present and discuss several dimension reduction approaches: (1) Incorporating domain knowledge to remove or combine categories, (2) using data summaries to detect information overlap between variables (and remove or combine redundant variables or categories), (3) using data conversion techniques such as converting categorical variables into numerical variables, and (4) employing automated reduction techniques, such as principal components analysis (PCA), where a new set of variables (which are weighted averages of the original variables) is created. These new variables are uncorrelated and a small subset of them usually contains most of their combined information (hence, we can reduce dimension by using only a subset of the new variables). Finally, we mention data mining methods such as regression models and regression and classification trees, which can be used for removing redundant variables and for combining "similar" categories of categorical variables.

Introduction

In data mining one often encounters situations where there are a large number of variables in the database. In such situations it is very likely that subsets of variables are highly correlated with each other. Included in a classification or prediction model, highly correlated variables, ...