Differences

This shows you the differences between two versions of the page.

--- verify [2025/02/06 16:12] – admin
+++ verify [2025/02/07 15:19] (current) – admin
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 == Relative Value Curves ==
-This shows the economic value of your binary decisions, based on the thresholds that were also used for ROC.  For example, if your cost is C=$6 to bring an umbrella when you expect rain, and your loss is L=$10 when it rains on you without your umbrella, your C/L ratio is 0.6. At 0.6, you can see that your maximum Relative Value is about 0.2. The red envelope curve is coincident with the curve labelled 0.750. So the maximum economic benefit occurs if you use a PoP of 75% for your threshold.  This means you should bring your umbrella only when the PoP is forecasted to be 80%, 90% or 100%.  The Relative Value of 20% means the economic benefit of using these imperfect forecasts is 20% of the value of perfect forecasts.
+This shows the economic value of your binary decisions, based on the thresholds that were also used for ROC.  For example, if your cost is C=$6 to bring an umbrella when you expect rain, and your loss is L=\$10 when it rains on you without your umbrella, your C/L ratio is 0.6. At 0.6, you can see that your maximum Relative Value is about 0.2. The red envelope curve is coincident with the curve labelled 0.750. So the maximum economic benefit occurs if you use a PoP of 75% for your threshold.  This means you should bring your umbrella only when the PoP is forecasted to be 80%, 90% or 100%.  The Relative Value of 20% means the economic benefit of using these imperfect forecasts is 20% of the value of perfect forecasts.
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