Exercise 03

Estimate a regression using the Income data

Forecast of income

We'll be working with a dataset from US Census indome (data dictionary).

Many businesses would like to personalize their offer based on customer’s income. High-income customers could be, for instance, exposed to premium products. As a customer’s income is not always explicitly known, predictive model could estimate income of a person based on other information.

Our goal is to create a predictive model that will be able to output an estimation of a person income.



In [1]:

    
import pandas as pd
import numpy as np

%matplotlib inline
import matplotlib.pyplot as plt

# read the data and set the datetime as the index
import zipfile
with zipfile.ZipFile('../datasets/income.csv.zip', 'r') as z:
    f = z.open('income.csv')
    income = pd.read_csv(f, index_col=0)

income.head()









    Out[1]:







  
    
      
      Age
      Workclass
      fnlwgt
      Education
      Education-Num
      Martial Status
      Occupation
      Relationship
      Race
      Sex
      Capital Gain
      Capital Loss
      Hours per week
      Country
      Income
    
  
  
    
      0
      39
      State-gov
      77516
      Bachelors
      13
      Never-married
      Adm-clerical
      Not-in-family
      White
      Male
      2174
      0
      40
      United-States
      51806.0
    
    
      1
      50
      Self-emp-not-inc
      83311
      Bachelors
      13
      Married-civ-spouse
      Exec-managerial
      Husband
      White
      Male
      0
      0
      13
      United-States
      68719.0
    
    
      2
      38
      Private
      215646
      HS-grad
      9
      Divorced
      Handlers-cleaners
      Not-in-family
      White
      Male
      0
      0
      40
      United-States
      51255.0
    
    
      3
      53
      Private
      234721
      11th
      7
      Married-civ-spouse
      Handlers-cleaners
      Husband
      Black
      Male
      0
      0
      40
      United-States
      47398.0
    
    
      4
      28
      Private
      338409
      Bachelors
      13
      Married-civ-spouse
      Prof-specialty
      Wife
      Black
      Female
      0
      0
      40
      Cuba
      30493.0



In [2]:

    
income.shape









    Out[2]:





(32561, 15)

Exercise 4.1

What is the relation between the age and Income?

For a one percent increase in the Age how much the income increases?

Using sklearn estimate a linear regression and predict the income when the Age is 30 and 40 years



In [3]:

    
income.plot(x='Age', y='Income', kind='scatter')









    Out[3]:





<matplotlib.axes._subplots.AxesSubplot at 0x1c5a2f1fac8>



In [ ]:

Exercise 03.2

Evaluate the model using the MSE



In [ ]:

Exercise 03.3

Run a regression model using as features the Age and Age$^2$ using the OLS equations



In [ ]:

Exercise 03.4

Estimate a regression using more features.

How is the performance compared to using only the Age?



In [ ]:

	Age	Workclass	fnlwgt	Education	Education-Num	Martial Status	Occupation	Relationship	Race	Sex	Capital Gain	Hours per week	Country	Income
0	39	State-gov	77516	Bachelors	13	Never-married	Adm-clerical	Not-in-family	White	Male	2174	40	United-States	51806.0
1	50	Self-emp-not-inc	83311	Bachelors	13	Married-civ-spouse	Exec-managerial	Husband	White	Male	0	13	United-States	68719.0
2	38	Private	215646	HS-grad	9	Divorced	Handlers-cleaners	Not-in-family	White	Male	0	40	United-States	51255.0
3	53	Private	234721	11th	7	Married-civ-spouse	Handlers-cleaners	Husband	Black	Male	0	40	United-States	47398.0
4	28	Private	338409	Bachelors	13	Married-civ-spouse	Prof-specialty	Wife	Black	Female	0	40	Cuba	30493.0