Society of Actuaries (SOA) PA Practice Exam

Which method is NOT a common way to handle unbalanced data?

1. Prioritization

2. Oversampling

3. Undersampling

4. Combination Sampling

The correct answer is: Prioritization

Prioritization is not a common way to handle unbalanced data in the context of data modeling and machine learning. This term typically refers to the process of determining the order of importance or urgency among various tasks or items and does not directly address the challenge of class imbalance in datasets. In contrast, oversampling, undersampling, and combination sampling are well-recognized techniques used to rectify class imbalance. Oversampling involves increasing the number of instances in the minority class, which can help the model learn better patterns related to that class. Undersampling, on the other hand, reduces the number of instances in the majority class to balance the dataset more evenly between classes. Combination sampling merges both processes, creating a balanced dataset by both adding to the minority class and removing from the majority class. These three methods aim explicitly to ensure that models do not become biased towards the majority class, allowing for more reliable predictions across all classes, which is why prioritization stands out as a method that doesn't directly deal with unbalanced data.