Is predictive analytics a better method than others for predicting the future? Why or why not?
Describe the difference between predicting and forecasting the future.Forecasting vs.
Similar but Different

A planning tool that helps management in its attempts to cope with the
uncertainty of the future, relying mainly on data from the past and present
and analysis of trends.

Forecasting starts with certain assumptions based on the management’s
experience, knowledge, and judgment.

A prediction is what someone thinks will happen. A prediction is a forecast,
but not only about the weather.

Pre means “before” and “diction” has to do with talking.

So a prediction is a statement about the future.

It’s a guess, sometimes based on facts or evidence, but not always.
Similar but Different

Forecasting: Is always associated with a time dimension in the future i.e.
estimation for some specific future duration or over a period of time e.g.
Total sales in July, 2017. Forecasting is a subset of prediction.

Prediction: An estimation of any event happening in the present, or future,
e.g. percentage of house owners buying home insurance

Also note that people usually do not differentiate between prediction and
forecasting and may use one or the other interchangeably
Using Models

Forecasting Model – Typically linked to a pattern or trend over period in time,
e. g., electricity consumption each month for next 6/12 months.

Predictive Model – Typically a predictive model is focused on a behavior of
objects or customers within a specified time. For example, a credit scorecard
predicts likelihood of a customer defaulting within 12/18 months.
Using Models

Second difference is that a forecasting model is built for aggregate
behaviors. For example:

In a credit card spend scenario, a predictive model might say how much
spend a customer will have.

Whereas, In a forecasting model, an estimate/forecast for the volume of
spending for a credit card portfolio as a whole.

For a number of reasons many people do not believe that you can predict the

Futurists say it’s not about predicting the future, but about exploring it to
improve decision-making today.

Forecasts are a set of possible futures that include probability estimates of

Predictions are one-off estimates of a specific event in the future; usually at
a specific point in time.
Using Predictions and Forecasts

Most projects are about predictions. The user of the information wants an
estimate of a specific future outcome at a specific time.

Forecasts are more useful in strategic discussions about what are the useful
variables/factors and what potential outcomes may exist. On occasion, the
analyst may need to help the client discern whether a prediction or forecast
is the most useful approach to their info needs.
Two Other Observations

Data mining focuses on identifying the factors associated with specific
outcomes. The goal is to identify the factors that have associated outcomes
and then apply this knowledge to a specific situation in the future.

Some futurists believe the term ‘predictive analytics’ should be dropped. In
the long run, most people don’t believe that you can predict the future.
Thus, this term is associated with ideas that folks do not believe…bad
Facebook – As an Example

The firm certainly has a need to Forecast the trends in its overall business, as
well as the need to Predict the behavior of individual users. Let’s illustrate
with some examples.

The simplest form of forecasting is the “lowly” line chart: Line Charts are an
EXCELLENT Forecasting Tool – As Long as the Trend is Smooth and Obvious

FORCASTING = “How Heavy Will The Traffic Be Next Month?”

PREDICTIVE = “Will the Yellow Car Get Off at the Next Exit?”

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