Predictive modelling

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In finance and mathematics, predictive modelling is the use of statistics to predict outcomes. Most often the event one wants to predict is in the future, but predictive modelling can be applied to any type of unknown event, regardless of when it occurred. For example, predictive models are often used to detect crimes and identify suspects, after the crime has taken place. The output of predictive models can come in multiple forms, such as an estimated probability of a certain event occurring (e.g. Binary regression), or a scalar response variable (e.g. Linear regression). The usage of predictive modelling in business decision making is often referred to as predictive analytics. Predictive modelling is often contrasted with causal modelling. In the former, one may be entirely satisfied to make use of indicators of, or proxies for, the outcome of interest. In the latter, one seeks to determine true cause-and-effect relationships. This distinction has given rise to a burgeoning literature...

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