Machine Learning Engineer Nanodegree

Model Evaluation & Validation

Project: Predicting Boston Housing Prices

Welcome to the first project of the Machine Learning Engineer Nanodegree! In this notebook, some template code has already been provided for you, and you will need to implement additional functionality to successfully complete this project. You will not need to modify the included code beyond what is requested. Sections that begin with 'Implementation' in the header indicate that the following block of code will require additional functionality which you must provide. Instructions will be provided for each section and the specifics of the implementation are marked in the code block with a 'TODO' statement. Please be sure to read the instructions carefully!

In addition to implementing code, there will be questions that you must answer which relate to the project and your implementation. Each section where you will answer a question is preceded by a 'Question X' header. Carefully read each question and provide thorough answers in the following text boxes that begin with 'Answer:'. Your project submission will be evaluated based on your answers to each of the questions and the implementation you provide.

Note: Code and Markdown cells can be executed using the Shift + Enter keyboard shortcut. In addition, Markdown cells can be edited by typically double-clicking the cell to enter edit mode.

Getting Started

In this project, you will evaluate the performance and predictive power of a model that has been trained and tested on data collected from homes in suburbs of Boston, Massachusetts. A model trained on this data that is seen as a good fit could then be used to make certain predictions about a home — in particular, its monetary value. This model would prove to be invaluable for someone like a real estate agent who could make use of such information on a daily basis.

The dataset for this project originates from the UCI Machine Learning Repository. The Boston housing data was collected in 1978 and each of the 506 entries represent aggregated data about 14 features for homes from various suburbs in Boston, Massachusetts. For the purposes of this project, the following preprocessing steps have been made to the dataset:

  • 16 data points have an 'MEDV' value of 50.0. These data points likely contain missing or censored values and have been removed.
  • 1 data point has an 'RM' value of 8.78. This data point can be considered an outlier and has been removed.
  • The features 'RM', 'LSTAT', 'PTRATIO', and 'MEDV' are essential. The remaining non-relevant features have been excluded.
  • The feature 'MEDV' has been multiplicatively scaled to account for 35 years of market inflation.

Run the code cell below to load the Boston housing dataset, along with a few of the necessary Python libraries required for this project. You will know the dataset loaded successfully if the size of the dataset is reported.


In [26]:
# Import libraries necessary for this project
import numpy as np
import pandas as pd
from sklearn.cross_validation import ShuffleSplit

# Import supplementary visualizations code visuals.py
import visuals as vs

# Pretty display for notebooks
%matplotlib inline

# Load the Boston housing dataset
data = pd.read_csv('housing.csv')
prices = data['MEDV']
features = data.drop('MEDV', axis = 1)
    
# Success
print "Boston housing dataset has {} data points with {} variables each.".format(*data.shape)


Boston housing dataset has 489 data points with 4 variables each.

Data Exploration

In this first section of this project, you will make a cursory investigation about the Boston housing data and provide your observations. Familiarizing yourself with the data through an explorative process is a fundamental practice to help you better understand and justify your results.

Since the main goal of this project is to construct a working model which has the capability of predicting the value of houses, we will need to separate the dataset into features and the target variable. The features, 'RM', 'LSTAT', and 'PTRATIO', give us quantitative information about each data point. The target variable, 'MEDV', will be the variable we seek to predict. These are stored in features and prices, respectively.

Implementation: Calculate Statistics

For your very first coding implementation, you will calculate descriptive statistics about the Boston housing prices. Since numpy has already been imported for you, use this library to perform the necessary calculations. These statistics will be extremely important later on to analyze various prediction results from the constructed model.

In the code cell below, you will need to implement the following:

  • Calculate the minimum, maximum, mean, median, and standard deviation of 'MEDV', which is stored in prices.
    • Store each calculation in their respective variable.

In [27]:
# TODO: Minimum price of the data
minimum_price = np.min(prices)

# TODO: Maximum price of the data
maximum_price = np.max(prices)

# TODO: Mean price of the data
mean_price = np.mean(prices)

# TODO: Median price of the data
median_price = np.median(prices)

# TODO: Standard deviation of prices of the data
std_price = np.std(prices)

# Show the calculated statistics
print "Statistics for Boston housing dataset:\n"
print "Minimum price: ${:,.2f}".format(minimum_price)
print "Maximum price: ${:,.2f}".format(maximum_price)
print "Mean price: ${:,.2f}".format(mean_price)
print "Median price ${:,.2f}".format(median_price)
print "Standard deviation of prices: ${:,.2f}".format(std_price)


Statistics for Boston housing dataset:

Minimum price: $105,000.00
Maximum price: $1,024,800.00
Mean price: $454,342.94
Median price $438,900.00
Standard deviation of prices: $165,171.13

Question 1 - Feature Observation

As a reminder, we are using three features from the Boston housing dataset: 'RM', 'LSTAT', and 'PTRATIO'. For each data point (neighborhood):

  • 'RM' is the average number of rooms among homes in the neighborhood.
  • 'LSTAT' is the percentage of homeowners in the neighborhood considered "lower class" (working poor).
  • 'PTRATIO' is the ratio of students to teachers in primary and secondary schools in the neighborhood.

Using your intuition, for each of the three features above, do you think that an increase in the value of that feature would lead to an increase in the value of 'MEDV' or a decrease in the value of 'MEDV'? Justify your answer for each.
Hint: Would you expect a home that has an 'RM' value of 6 be worth more or less than a home that has an 'RM' value of 7?

Answer:

  1. RM - This feature is directly proportional to the size of the house. When the RM increases the house size increases accordingly. Bigger houses occupy more area which means more proce has to be paid for bigger houses. So we can safely say, if RM increases, then prices will increase too. (np.corrcoef(features['RM'].tolist(), prices) = 0.69720922)
  2. LSTAT - This feature indicates lower income households percentage. Lower income households cannot purchase larger RM houses. This indicates a direct correlation to the purchase of houses with lower RM. Thus the average prices of the houses bought will be lower. (np.corrcoef(features['LSTAT'].tolist(), prices) = -0.76067006)
  3. PTRATIO - This feature indicates a direct relation to number of young people. If PTRATIO is higher, it means the population contains higher children and teenagers rather than working people. So a population containing higher rate of children and teenagers cannot produce higher income for few years. So the prices feature will contain normal or low purchasing power. (np.corrcoef(features['PTRATIO'].tolist(), prices) = -0.5190335)
  4. NOTE: All above statements are verified thourgh np.corrcoef(, prices) function. A positive function result value indicates a direct correlation and a negative value of the function indicates an inverse correlation. Reference: https://en.wikipedia.org/wiki/Cross-correlation

Developing a Model

In this second section of the project, you will develop the tools and techniques necessary for a model to make a prediction. Being able to make accurate evaluations of each model's performance through the use of these tools and techniques helps to greatly reinforce the confidence in your predictions.

Implementation: Define a Performance Metric

It is difficult to measure the quality of a given model without quantifying its performance over training and testing. This is typically done using some type of performance metric, whether it is through calculating some type of error, the goodness of fit, or some other useful measurement. For this project, you will be calculating the coefficient of determination, R2, to quantify your model's performance. The coefficient of determination for a model is a useful statistic in regression analysis, as it often describes how "good" that model is at making predictions.

The values for R2 range from 0 to 1, which captures the percentage of squared correlation between the predicted and actual values of the target variable. A model with an R2 of 0 is no better than a model that always predicts the mean of the target variable, whereas a model with an R2 of 1 perfectly predicts the target variable. Any value between 0 and 1 indicates what percentage of the target variable, using this model, can be explained by the features. A model can be given a negative R2 as well, which indicates that the model is arbitrarily worse than one that always predicts the mean of the target variable.

For the performance_metric function in the code cell below, you will need to implement the following:

  • Use r2_score from sklearn.metrics to perform a performance calculation between y_true and y_predict.
  • Assign the performance score to the score variable.

In [28]:
# TODO: Import 'r2_score' - DONE
from sklearn.metrics import r2_score

def performance_metric(y_true, y_predict):
    """ Calculates and returns the performance score between 
        true and predicted values based on the metric chosen. """
    
    # TODO: Calculate the performance score between 'y_true' and 'y_predict' - DONE
    score = r2_score(y_true, y_predict)
    
    # Return the score
    return score

Question 2 - Goodness of Fit

Assume that a dataset contains five data points and a model made the following predictions for the target variable:

True Value Prediction
3.0 2.5
-0.5 0.0
2.0 2.1
7.0 7.8
4.2 5.3

Would you consider this model to have successfully captured the variation of the target variable? Why or why not?

Run the code cell below to use the performance_metric function and calculate this model's coefficient of determination.


In [29]:
# Calculate the performance of this model
score = performance_metric([3, -0.5, 2, 7, 4.2], [2.5, 0.0, 2.1, 7.8, 5.3])
print "Model has a coefficient of determination, R^2, of {:.3f}.".format(score)


Model has a coefficient of determination, R^2, of 0.923.

Answer: R^2 score(0.923) is closer to 1. This is a higher prediction rate thus indicating that the model can capture the variation of the target variable at a higher rate.

Implementation: Shuffle and Split Data

Your next implementation requires that you take the Boston housing dataset and split the data into training and testing subsets. Typically, the data is also shuffled into a random order when creating the training and testing subsets to remove any bias in the ordering of the dataset.

For the code cell below, you will need to implement the following:

  • Use train_test_split from sklearn.cross_validation to shuffle and split the features and prices data into training and testing sets.
    • Split the data into 80% training and 20% testing.
    • Set the random_state for train_test_split to a value of your choice. This ensures results are consistent.
  • Assign the train and testing splits to X_train, X_test, y_train, and y_test.

In [30]:
# TODO: Import 'train_test_split' - DONE
from sklearn.cross_validation import train_test_split
# TODO: Shuffle and split the data into training and testing subsets - DONE
X_train, X_test, y_train, y_test = train_test_split(features, prices, test_size=0.20, random_state=42)

# Success
print "Training and testing split was successful."


Training and testing split was successful.

Question 3 - Training and Testing

What is the benefit to splitting a dataset into some ratio of training and testing subsets for a learning algorithm?
Hint: What could go wrong with not having a way to test your model?

Answer: Training data helps the model to learn the function behind the features. Testing helps in measuring the accuracy of the models prediction rate. Without testing data the model could overfit the data and that cannot be known.


Analyzing Model Performance

In this third section of the project, you'll take a look at several models' learning and testing performances on various subsets of training data. Additionally, you'll investigate one particular algorithm with an increasing 'max_depth' parameter on the full training set to observe how model complexity affects performance. Graphing your model's performance based on varying criteria can be beneficial in the analysis process, such as visualizing behavior that may not have been apparent from the results alone.

Learning Curves

The following code cell produces four graphs for a decision tree model with different maximum depths. Each graph visualizes the learning curves of the model for both training and testing as the size of the training set is increased. Note that the shaded region of a learning curve denotes the uncertainty of that curve (measured as the standard deviation). The model is scored on both the training and testing sets using R2, the coefficient of determination.

Run the code cell below and use these graphs to answer the following question.


In [31]:
# Produce learning curves for varying training set sizes and maximum depths
vs.ModelLearning(features, prices)


Question 4 - Learning the Data

Choose one of the graphs above and state the maximum depth for the model. What happens to the score of the training curve as more training points are added? What about the testing curve? Would having more training points benefit the model?
Hint: Are the learning curves converging to particular scores?

Answer: At max_depth=3, the training and testing scores are closer than in any other models. Increasing the training data size reduces the flexibility of the model. All models above shows that the scores become stable later on when the number of training points increases.

The training score decreases when max_depth is lower(refer max_depth=1, 3 and 6). However the training score converge later above 350 training points in max_depth=1,3, and 6. So it is safe to say that training score converges with higher number of training points and becomes too flexible when max_depth=10. This indicates overfitting. Eventhough the scores are higher in max_depth=10, a higher prediction percentage is achieved at max_depth=3.

The testing score increases at max_depth=3 and remains stable when max_depth is increased. Thus indicating that the testing score increases with increase in number of points. Also at max_depth=3 the convergence seems to be higher.

Since we already see optimal convergence at max_depth=3 at 300 training points, more training points isn't going to benefit the model any longer.

Complexity Curves

The following code cell produces a graph for a decision tree model that has been trained and validated on the training data using different maximum depths. The graph produces two complexity curves — one for training and one for validation. Similar to the learning curves, the shaded regions of both the complexity curves denote the uncertainty in those curves, and the model is scored on both the training and validation sets using the performance_metric function.

Run the code cell below and use this graph to answer the following two questions.


In [32]:
vs.ModelComplexity(X_train, y_train)


Question 5 - Bias-Variance Tradeoff

When the model is trained with a maximum depth of 1, does the model suffer from high bias or from high variance? How about when the model is trained with a maximum depth of 10? What visual cues in the graph justify your conclusions?
Hint: How do you know when a model is suffering from high bias or high variance?

Answer: From the models shown above, at max_depth=1, the model has lower scores for both training and testing data. This indicates the model is not complex enough to capture the underlying relationships. This indicates that the model is suffering from high bias(lowest R^2 score).

While the max_depth=10, the uncertainity in the training score is at the lowest but the testing score is lower compared to the training score. The difference between the scores are highest at max_depth=10. This indicates that the model is suffering from high variance.

Question 6 - Best-Guess Optimal Model

Which maximum depth do you think results in a model that best generalizes to unseen data? What intuition lead you to this answer?

Answer: A model is predicting accurately when the training and testing scores are closer in scale. At max_depth=4, the scores are closer and optimal than in other max_depth models. Thus I can say that the model is best stable at generalizing the unseen data when the max_depth is closer to 4.


Evaluating Model Performance

In this final section of the project, you will construct a model and make a prediction on the client's feature set using an optimized model from fit_model.

What is the grid search technique and how it can be applied to optimize a learning algorithm?

Answer: Grid search technique is used to train a set of models(Ex: SVM) where each model differs by their parameters(Ex: gamma, C) use. Later we use cross-validation to evaluate those models and select a model with optimal performance. The keyword 'Grid' indicates the grid of parameters, where the grid contains all combinations of those parameters. For example, let gamma parameter has two values, and C parameters has two values, their combinations would produce, 2*2 parameter pairs in total.

Question 8 - Cross-Validation

What is the k-fold cross-validation training technique? What benefit does this technique provide for grid search when optimizing a model?
Hint: Much like the reasoning behind having a testing set, what could go wrong with using grid search without a cross-validated set?

Answer: Cross validation is performed on the model to evaluate how it generalizes on an unseen data. It divides the data into training and testing pair for learning the model. But the efficiency depends upon the size and the order of the data being used for the model. So the data is usually divided into k sized subsets with 1 subset for testing and remaining k-1 for training the model. These k subsets are used for cross validation thus called k-fold cross-validation technique. All scores from the k-fold is then average to compute the final score fo the model.

The benefit of using Grid search is the exhaustive search it performs on large set of parameters to optimize the model.

If no cross-validation is used with the Grid search, then there is a possiblity that the model may not generalize well on the unseen data. And we cannot measure the model's performance on the unseen data. This is the reason to use cross validation and Grid search together.

Implementation: Fitting a Model

Your final implementation requires that you bring everything together and train a model using the decision tree algorithm. To ensure that you are producing an optimized model, you will train the model using the grid search technique to optimize the 'max_depth' parameter for the decision tree. The 'max_depth' parameter can be thought of as how many questions the decision tree algorithm is allowed to ask about the data before making a prediction. Decision trees are part of a class of algorithms called supervised learning algorithms.

In addition, you will find your implementation is using ShuffleSplit() for an alternative form of cross-validation (see the 'cv_sets' variable). While it is not the K-Fold cross-validation technique you describe in Question 8, this type of cross-validation technique is just as useful!. The ShuffleSplit() implementation below will create 10 ('n_iter') shuffled sets, and for each shuffle, 20% ('test_size') of the data will be used as the validation set. While you're working on your implementation, think about the contrasts and similarities it has to the K-fold cross-validation technique.

For the fit_model function in the code cell below, you will need to implement the following:

  • Use DecisionTreeRegressor from sklearn.tree to create a decision tree regressor object.
    • Assign this object to the 'regressor' variable.
  • Create a dictionary for 'max_depth' with the values from 1 to 10, and assign this to the 'params' variable.
  • Use make_scorer from sklearn.metrics to create a scoring function object.
    • Pass the performance_metric function as a parameter to the object.
    • Assign this scoring function to the 'scoring_fnc' variable.
  • Use GridSearchCV from sklearn.grid_search to create a grid search object.
    • Pass the variables 'regressor', 'params', 'scoring_fnc', and 'cv_sets' as parameters to the object.
    • Assign the GridSearchCV object to the 'grid' variable.

In [33]:
# TODO: Import 'make_scorer', 'DecisionTreeRegressor', and 'GridSearchCV' - DONE
from sklearn.metrics import make_scorer
from sklearn import grid_search
from sklearn.tree import DecisionTreeRegressor

def fit_model(X, y):
    """ Performs grid search over the 'max_depth' parameter for a 
        decision tree regressor trained on the input data [X, y]. """
    
    # Create cross-validation sets from the training data
    cv_sets = ShuffleSplit(X.shape[0], n_iter = 10, test_size = 0.20, random_state = 0)

    # TODO: Create a decision tree regressor object - DONE
    regressor = DecisionTreeRegressor(random_state=0)

    # TODO: Create a dictionary for the parameter 'max_depth' with a range from 1 to 10 - DONE
    params = {'max_depth': range(1,11)}

    # TODO: Transform 'performance_metric' into a scoring function using 'make_scorer' - DONE 
    scoring_fnc = make_scorer(performance_metric)

    # TODO: Create the grid search object - DONE
    grid = grid_search.GridSearchCV(estimator=regressor, param_grid=params, scoring=scoring_fnc, cv=cv_sets)

    # Fit the grid search object to the data to compute the optimal model
    grid = grid.fit(X, y)

    # Return the optimal model after fitting the data
    return grid.best_estimator_

Making Predictions

Once a model has been trained on a given set of data, it can now be used to make predictions on new sets of input data. In the case of a decision tree regressor, the model has learned what the best questions to ask about the input data are, and can respond with a prediction for the target variable. You can use these predictions to gain information about data where the value of the target variable is unknown — such as data the model was not trained on.

Question 9 - Optimal Model

What maximum depth does the optimal model have? How does this result compare to your guess in Question 6?

Run the code block below to fit the decision tree regressor to the training data and produce an optimal model.


In [34]:
# Fit the training data to the model using grid search
reg = fit_model(X_train, y_train)

# Produce the value for 'max_depth'
print "Parameter 'max_depth' is {} for the optimal model.".format(reg.get_params()['max_depth'])


Parameter 'max_depth' is 4 for the optimal model.

Answer: Parameter 'max_depth' is 4 for the optimal model. The above answer indicates that my initial conclusion that max_depth=4 is optimal for the model.

Question 10 - Predicting Selling Prices

Imagine that you were a real estate agent in the Boston area looking to use this model to help price homes owned by your clients that they wish to sell. You have collected the following information from three of your clients:

Feature Client 1 Client 2 Client 3
Total number of rooms in home 5 rooms 4 rooms 8 rooms
Neighborhood poverty level (as %) 17% 32% 3%
Student-teacher ratio of nearby schools 15-to-1 22-to-1 12-to-1

What price would you recommend each client sell his/her home at? Do these prices seem reasonable given the values for the respective features?
Hint: Use the statistics you calculated in the Data Exploration section to help justify your response.

Run the code block below to have your optimized model make predictions for each client's home.


In [38]:
# Produce a matrix for client data
client_data = [[5, 17, 15], # Client 1
               [4, 32, 22], # Client 2
               [8, 3, 12]]  # Client 3

# Show predictions
for i, price in enumerate(reg.predict(client_data)):
    print "Predicted selling price for Client {}'s home: ${:,.2f}".format(i+1, price)

print features.describe(), "\n"
print prices.describe()


Predicted selling price for Client 1's home: $403,025.00
Predicted selling price for Client 2's home: $237,478.72
Predicted selling price for Client 3's home: $931,636.36
               RM       LSTAT     PTRATIO
count  489.000000  489.000000  489.000000
mean     6.240288   12.939632   18.516564
std      0.643650    7.081990    2.111268
min      3.561000    1.980000   12.600000
25%      5.880000    7.370000   17.400000
50%      6.185000   11.690000   19.100000
75%      6.575000   17.120000   20.200000
max      8.398000   37.970000   22.000000 

count    4.890000e+02
mean     4.543429e+05
std      1.653403e+05
min      1.050000e+05
25%      3.507000e+05
50%      4.389000e+05
75%      5.187000e+05
max      1.024800e+06
Name: MEDV, dtype: float64

Answer: I would recommend the sellng prices be at \$403,025.00, \$237,478.72 and \$931,636.36 for the clients 1, 2, and 3 respectively. The predicted proces seems reasonable to me. Client 1's price is slightly higher but the rooms are higher and poeverty level is moderate and student-teacher ratio is also moderate. Client 2's price is lower since less rooms and the poverty level is higher and student-teacher ratio is also higher. Client 3's price is highest since the higher rooms and lowest poverty level and lowest student-teacher ratio.

From Data Exploration, we found that number of rooms is directly proportional to the price and other two features poverty level and student-teacher ratio are inversely proportional to the prices. This relationship is very obvious in the predicted selling proces for the clients.

Sensitivity

An optimal model is not necessarily a robust model. Sometimes, a model is either too complex or too simple to sufficiently generalize to new data. Sometimes, a model could use a learning algorithm that is not appropriate for the structure of the data given. Other times, the data itself could be too noisy or contain too few samples to allow a model to adequately capture the target variable — i.e., the model is underfitted. Run the code cell below to run the fit_model function ten times with different training and testing sets to see how the prediction for a specific client changes with the data it's trained on.


In [36]:
vs.PredictTrials(features, prices, fit_model, client_data)


Trial 1: $391,183.33
Trial 2: $424,935.00
Trial 3: $415,800.00
Trial 4: $420,622.22
Trial 5: $418,377.27
Trial 6: $411,931.58
Trial 7: $399,663.16
Trial 8: $407,232.00
Trial 9: $351,577.61
Trial 10: $413,700.00

Range in prices: $73,357.39

Question 11 - Applicability

In a few sentences, discuss whether the constructed model should or should not be used in a real-world setting.
Hint: Some questions to answering:

  • How relevant today is data that was collected from 1978?
  • Are the features present in the data sufficient to describe a home?
  • Is the model robust enough to make consistent predictions?
  • Would data collected in an urban city like Boston be applicable in a rural city?

Answer:

  1. The features and their relationship to the prices would still hold today.
  2. No. We have to consider many details like hospitals, crime rate, transportation facilities, 911 response time, air and water pollutions, lead painted walls, parking spaces, super markets, factories, etc.
  3. For the year 1978 it is. But not for 2016, obviously.
  4. No. In rural city, some factors might not be the same. Prices might differe from place to place. Model has to be trained with data collected from rural city. Else the model might predict incorrectly for the rural city.

Finally, it would be inaccurate to use the same data for different cities and with increase in time, we have to use the current data or better chose live data. So the model created using 1978 data would be inapplicable and should not be used for real-world setting.

Note: Once you have completed all of the code implementations and successfully answered each question above, you may finalize your work by exporting the iPython Notebook as an HTML document. You can do this by using the menu above and navigating to
File -> Download as -> HTML (.html). Include the finished document along with this notebook as your submission.


In [ ]: