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Data Science & Statistical Analysis• 6 min read
Evaluation Metrics: Accuracy, Precision, Recall & F1
Understand why accuracy is misleading for imbalanced datasets, and master Precision, Recall, and the F1-Score.
The Accuracy Paradox
If 99% of transactions are legitimate and 1% are fraudulent, a naive model that predicts "legitimate" for every single case has 99% accuracy while catching 0% of fraud! This is why Precision and Recall are mandatory.
Precision: True Positives / (True Positives + False Positives). "When the model predicts fraud, is it right?"
Recall: True Positives / (True Positives + False Negatives). "Did we catch all actual fraud cases?"
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Test Yourself With Exercise
Which metric measures the proportion of actual positive cases that were correctly identified by the model?