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Data Mining
Chapter 26

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Chapter 1. Introduction
Motivation: Why data mining?
What is data mining?
Data Mining: On what kind of data?
Data mining functionality
Are all the patterns interesting?
Major issues in data mining
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Motivation: Necessity is the
Mother of Invention
Data explosion problem
Automated data collection tools and mature database technology
lead to tremendous amounts of data stored in databases, data
warehouses and other information repositories
We are drowning in data, but starving for knowledge!
Solution: Data warehousing and data mining
Data warehousing and on-line analytical processing
Extraction of interesting knowledge (rules, regularities,
patterns, constraints) from data in large databases
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Evolution of Database Technology
1960s:
Data collection, database creation, IMS and network DBMS
1970s:
Relational data model, relational DBMS implementation
1980s:
RDBMS, advanced data models (extended-relational, OO,
deductive, etc.) and application-oriented DBMS (spatial, scientific,
engineering, etc.)
1990s2000s:
Data mining and data warehousing, multimedia databases, and
Web databases
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What Is Data Mining?
Data mining (knowledge discovery in databases):
Extraction of interesting (non-trivial, implicit, previously
unknown and potentially useful) information or patterns
from data in large databases
Alternative names:
Data mining: a misnomer?
Knowledge discovery(mining) in databases (KDD),
knowledge extraction, data/pattern analysis, data
archeology, data dredging, information harvesting,
business intelligence, etc.
What is not data mining?
(Deductive) query processing.
Expert systems or small ML/statistical programs
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Why Data Mining? Potential
Applications
Database analysis and decision support
Market analysis and management
target marketing, customer relation management, market
basket analysis, cross selling, market segmentation
Risk analysis and management
Forecasting, customer retention, improved underwriting,
quality control, competitive analysis
Fraud detection and management
Other Applications
Text mining (news group, email, documents)
Stream data mining
Web mining.
DNA data analysis
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Market Analysis and Management (1)
Where are the data sources for analysis?
Credit card transactions, loyalty cards, discount coupons,
customer complaint calls, plus (public) lifestyle studies
Target marketing
Find clusters of model customers who share the same
characteristics: interest, income level, spending habits, etc.
Determine customer purchasing patterns over time
Conversion of single to a joint bank account: marriage, etc.
Cross-market analysis
Associations/co-relations between product sales
Prediction based on the association information
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Market Analysis and Management (2)
Customer profiling
data mining can tell you what types of customers buy what
products (clustering or classification)
Identifying customer requirements
identifying the best products for different customers
use prediction to find what factors will attract new customers
Provides summary information
various multidimensional summary reports
statistical summary information (data central tendency and
variation)
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Corporate Analysis and Risk
Management
Finance planning and asset evaluation
cash flow analysis and prediction
contingent claim analysis to evaluate assets
cross-sectional and time series analysis (financial-ratio, trend
analysis, etc.)
Resource planning:
summarize and compare the resources and spending
Competition:
monitor competitors and market directions
group customers into classes and a class-based pricing
procedure
set pricing strategy in a highly competitive market
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Fraud Detection and Management (1)
Applications
widely used in health care, retail, credit card services,
telecommunications (phone card fraud), etc.
Approach
use historical data to build models of fraudulent behavior and
use data mining to help identify similar instances
Examples
auto insurance: detect a group of people who stage accidents to
collect on insurance
money laundering: detect suspicious money transactions (US
Treasury's Financial Crimes Enforcement Network)
medical insurance: detect professional patients and ring of
doctors and ring of references
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Fraud Detection and Management (2)
Detecting inappropriate medical treatment
Australian Health Insurance Commission identifies that in many
cases blanket screening tests were requested (save Australian
$1m/yr).
Detecting telephone fraud
Telephone call model: destination of the call, duration, time of
day or week. Analyze patterns that deviate from an expected
norm.
British Telecom identified discrete groups of callers with frequent
intra-group calls, especially mobile phones, and broke a
multimillion dollar fraud.
Retail
Analysts estimate that 38% of retail shrink is due to dishonest
employees.
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Other Applications
Sports
IBM Advanced Scout analyzed NBA game statistics (shots
blocked, assists, and fouls) to gain competitive advantage for
New York Knicks and Miami Heat
Astronomy
JPL and the Palomar Observatory discovered 22 quasars with
the help of data mining
Internet Web Surf-Aid
IBM Surf-Aid applies data mining algorithms to Web access logs
for market-related pages to discover customer preference and
behavior pages, analyzing effectiveness of Web marketing,
improving Web site organization, etc.
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Data Mining: A KDD Process
Data mining: the core of
knowledge discovery
process.
Data Cleaning
Data Integration
Databases
Data Warehouse
Task-relevant Data
Selection
Data Mining
Pattern Evaluation
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Steps of a KDD Process
Learning the application domain:
relevant prior knowledge and goals of application
Creating a target data set: data selection
Data cleaning and preprocessing: (may take 60% of effort!)
Data reduction and transformation:
Find useful features, dimensionality/variable reduction, invariant
representation.
Choosing functions of data mining
summarization, classification, regression, association, clustering.
Choosing the mining algorithm(s)
Data mining: search for patterns of interest
Pattern evaluation and knowledge presentation
visualization, transformation, removing redundant patterns, etc.
Use of discovered knowledge
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Data Mining: On What Kind of
Data?
Relational databases
Data warehouses
Transactional databases
Advanced DB and information repositories
Object-oriented and object-relational databases
Spatial and temporal data
Time-series data and stream data
Text databases and multimedia databases
Heterogeneous and legacy databases
WWW
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Data Mining Functionalities
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Association Rule Mining
Association rule mining:
Finding frequent patterns, associations, correlations, or causal
structures among sets of items or objects in transaction
databases, relational databases, and other information
repositories.
Frequent pattern: pattern (set of items, sequence, etc.) that
occurs frequently in a database
Motivation: finding regularities in data
What products were often purchased together? Beer and
diapers?!
What are the subsequent purchases after buying a PC?
What kinds of DNA are sensitive to this new drug?
Can we automatically classify web documents?
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Association Rule Mining (cont.)
Itemset X={x
1
, , x
k
}
Find all the rules XY with min
confidence and support
support, s, probability that a
transaction contains XY
confidence, c, conditional
probability that a transaction
having X also contains Y.
Let min_support = 50%,
min_conf = 50%:
A C (50%, 66.7%)
C A (50%, 100%)
Customer
buys
diapers
Customer
buys both
Customer
buys beer
Transaction-id Items bought
10 A, B, C
20 A, C
30 A, D
40 B, E, F
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Mining Association Rulesan Example
For rule A C:
support = support({A}{C}) = 50%
confidence = support({A}{C})/support({A}) = 66.6%
Min. support 50%
Min. confidence 50%
Transaction-id Items bought
10 A, B, C
20 A, C
30 A, D
40 B, E, F
Frequent pattern Support
{A} 75%
{B} 50%
{C} 50%
{A, C} 50%
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Apriori: A Candidate Generation-and-test
Approach
Any subset of a frequent itemset must be frequent
if {beer, diaper, nuts} is frequent, so is {beer, diaper}
every transaction having {beer, diaper, nuts} also contains {beer, diaper}
Apriori pruning principle: If there is any itemset which is infrequent, its
superset should not be generated/tested!
Method:
generate length (k+1) candidate itemsets from length k frequent
itemsets, and
test the candidates against DB
The performance studies show its efficiency and scalability
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The Apriori Algorithm An Example
Database TDB
1
st
scan
C
1
L
1
L
2
C
2
C
2
2
nd
scan
C
3
L
3
3
rd
scan
Tid Items
10 A, C, D
20 B, C, E
30 A, B, C, E
40 B, E
Itemset sup
{A} 2
{B} 3
{C} 3
{D} 1
{E} 3
Itemset sup
{A} 2
{B} 3
{C} 3
{E} 3
Itemset
{A, B}
{A, C}
{A, E}
{B, C}
{B, E}
{C, E}
Itemset sup
{A, B} 1
{A, C} 2
{A, E} 1
{B, C} 2
{B, E} 3
{C, E} 2
Itemset sup
{A, C} 2
{B, C} 2
{B, E} 3
{C, E} 2
Itemset
{B, C, E}
Itemset sup
{B, C, E} 2
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The Apriori Algorithm
Pseudo-code:
C
k
: Candidate itemset of size k
L
k
: frequent itemset of size k

L
1
= {frequent items};
for (k = 1; L
k
!=; k++) do begin
C
k+1
= candidates generated from L
k
;
for each transaction t in database do
increment the count of all candidates in C
k+1

that are contained in t
L
k+1
= candidates in C
k+1
with min_support
end
return
k
L
k
;
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Important Details of Apriori
How to generate candidates?
Step 1: self-joining L
k
Step 2: pruning
Example of Candidate-generation
L
3
={abc, abd, acd, ace, bcd}
Self-joining: L
3
*L
3

abcd from abc and abd
acde from acd and ace
Pruning:
acde is removed because ade is not in L
3
C
4
={abcd}

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How to Generate Candidates?
Suppose the items in L
k-1
are listed in an order
Step 1: self-joining L
k-1

insert into C
k
select p.item
1
, p.item
2
, , p.item
k-1
, q.item
k-1

from L
k-1
p, L
k-1
q
where p.item
1
=q.item
1
, , p.item
k-2
=q.item
k-2
, p.item
k-1
< q.item
k-
1
Step 2: pruning
forall itemsets c in C
k
do
forall (k-1)-subsets s of c do
if (s is not in L
k-1
) then delete c from C
k

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Classification and Prediction
Finding models (functions) that describe and
distinguish classes or concepts for future prediction
E.g., classify countries based on climate, or classify
cars based on gas mileage
Presentation: decision-tree, classification rule, neural
network
Prediction: Predict some unknown or missing
numerical values
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Classification Process: Model
Construction
Training
Data
NAME RANK YEARS TENURED
Mike Assistant Prof 3 no
Mary Assistant Prof 7 yes
Bill Professor 2 yes
Jim Associate Prof 7 yes
Dave Assistant Prof 6 no
Anne Associate Prof 3 no
Classification
Algorithms
IF rank = professor
OR years > 6
THEN tenured = yes
Classifier
(Model)
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Classification Process: Use the
Model in Prediction
Classifier
Testing
Data
NAME RANK YEARS TENURED
Tom Assistant Prof 2 no
Merlisa Associate Prof 7 no
George Professor 5 yes
Joseph Assistant Prof 7 yes
Unseen Data
(Jeff, Professor, 4)
Tenured?
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Decision Trees
age income student credit_rating
<=30 high no fair
<=30 high no excellent
3140 high no fair
>40 medium no fair
>40 low yes fair
>40 low yes excellent
3140 low yes excellent
<=30 medium no fair
<=30 low yes fair
>40 medium yes fair
<=30 medium yes excellent
3140 medium no excellent
3140 high yes fair
>40 medium no excellent
Training
set
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Output: A Decision Tree for
buys_computer
age?
overcast
student? credit rating?
no yes fair excellent
<=30
>40
no no yes yes
yes
30..40
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Cluster and outlier analysis
Cluster analysis
Class label is unknown: Group data to form new classes, e.g., cluster
houses to find distribution patterns
Clustering based on the principle: maximizing the intra-class similarity
and minimizing the interclass similarity
Outlier analysis
Outlier: a data object that does not comply with the general behavior of
the data
It can be considered as noise or exception but is quite useful in fraud
detection, rare events analysis

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Clusters and Outliers