Conditional Probability Data Analysis Example

In this class, We discuss Conditional Probability Data Analysis Example.

For Complete YouTube Video: Click Here

The reader should have prior knowledge of conditional probability. Click Here.

Example:

The bank data is collected.

We approved a total of 620 loans in one year.

The customers did not pay seventy loans.

Given a new loan, what is the probability that he is not going to pay the loan?

P(not going to pay) = 70/620 = 0.12.

This simple analysis is not enough in real-time data sets.

We need a deeper understanding of data analysis.

The example below helps you understand the need for conditional probability in data analysis.

We divide the data into two categories.

The loans are to those below 25 and above 25 years of age.

The below table shows the data categories.

P(not going to pay | age below 25) = 30/180 = 1/6

The sample space changes with the condition.

Age below 25, we have a sample space of 180.

Probability loans are not going to pay much for those aged below 25.

Conditional probability helps in the deeper analysis of the data.