Question

In fitting a model to classify prospects as purchasers or non-purchasers, a certain company drew the training data from internal data that include demographic and purchase information. Future data to be classified will be lists purchased from other sources, with demographic (but not purchase) data included. It was found that "refund issued" was a useful predictor in the training data. Is this an appropriate variable to include in the model?

a. Yes
b. No

Answer 1

Answer:

The correct answer is letter "B": No.

Explanation:

The purpose of the research is to determine what prospects are purchasers and non-purchasers. Then, if only information about refunds is considered, out of the whole population the study will be selecting only the portion of individuals who made a purchase but requested a reimbursement.  

Thus, it is not suitable to consider as a variable people who made a refund only.