Fundamentals of AI and ML · Topic 7 of 8

Model Performance Metrics

Read the confusion matrix and choose between accuracy, precision, recall, F1 score, AUC and error metrics, and link model scores to business metrics.

  • 4 min
In a nutshell
  • A confusion matrix has TP, FP, FN and TN.
  • Accuracy is the share of all correct predictions, and it can mislead on unbalanced data.
  • Precision is TP divided by TP plus FP, and it matters when false alarms are costly.

What it is

Evaluation tells you whether a trained model is good enough to use. Different tasks need different metrics, and the right metric depends on which kind of mistake costs the most.

There are two layers of measurement. Technical metrics describe how well the model predicts, and business metrics describe whether it helps the organisation.

Test dataunseen examplesModelmakes predictionsMetricsaccuracy, recall, errorDecisionship or improve

How it works

The confusion matrix

For a classification task with a positive class, such as fraud, every prediction falls in one of four boxes.

Predicted positivePredicted negative
Actually positiveTrue positive (TP)False negative (FN)
Actually negativeFalse positive (FP)True negative (TN)

A false positive is a false alarm. A false negative is a miss, where the model fails to catch a real positive.

Classification metrics

MetricQuestion it answersFormula
AccuracyHow often is the model right overall(TP + TN) / all predictions
PrecisionOf the items flagged positive, how many truly areTP / (TP + FP)
RecallOf all real positives, how many were foundTP / (TP + FN)
F1 scoreA single balance of precision and recallHarmonic mean of the two
AUCHow well the model separates the classes across thresholdsArea under the ROC curve

AUC stands for area under the curve, and the curve is the receiver operating characteristic (ROC) curve. A value near 1 means very good separation, and a value near 0.5 means no better than guessing.

Choosing the right metric

Accuracy can mislead when classes are unbalanced. If only 1 transaction in 1,000 is fraud, a model that always says not fraud is 99.9 percent accurate and catches nothing.

  • Choose recall when missing a real case is costly, such as a disease screening or fraud check.
  • Choose precision when false alarms are costly, such as blocking a good customer by mistake.
  • Choose F1 when both matter and you want one number.

Regression metrics

Regression predicts numbers, so metrics measure the size of the error.

MetricMeaning
Mean absolute error (MAE)Average size of the errors
Mean squared error (MSE)Average of squared errors, which punishes big misses
Root mean squared error (RMSE)Square root of MSE, in the same unit as the target
R squaredShare of variation in the target that the model explains

Lower error is better. A higher R squared is better.

Business metrics

A good technical score does not guarantee value. Link the model to the business goal set at the start.

Business metricExample use
Cost savingsFewer manual reviews
Revenue or conversionMore purchases from recommendations
Customer satisfactionFaster answers from a chatbot
EfficiencyLess time to process a document
Risk reductionFewer undetected frauds

Evaluation on AWS

Amazon SageMaker AI reports training and validation metrics for the models you train. Amazon SageMaker Clarify can check a model for bias and explain predictions, and it comes up again in the responsible AI chapter.

What to remember for the exam

  • A confusion matrix has TP, FP, FN and TN.
  • Accuracy is the share of all correct predictions, and it can mislead on unbalanced data.
  • Precision is TP divided by TP plus FP, and it matters when false alarms are costly.
  • Recall is TP divided by TP plus FN, and it matters when misses are costly.
  • F1 balances precision and recall.
  • AUC close to 1 means the model separates classes well, and 0.5 is no better than chance.
  • MAE, MSE and RMSE measure error for regression, and lower is better.
  • Always tie technical results to a business metric.
Exam tip

Ask which error hurts more. If missing a case is worse, pick recall, and if a false alarm is worse, pick precision.

Common mistakes

Trusting accuracy on rare events. When positives are rare, a useless model can still look highly accurate.

Swapping precision and recall. Precision looks at the flagged items. Recall looks at the real positives.

Using classification metrics for regression. Accuracy and F1 do not suit a numeric target. Use an error metric.

Judging success on the model score alone. A model can score well and still miss the business goal.

Reading a lower error as worse. For error metrics, lower values are better.

Check yourself

  • A cancer screening model must catch as many real cases as possible. Which metric matters most?

    Recall, since a missed case is the costly mistake.

  • Why can accuracy be misleading?

    With rare positive cases, a model that never predicts them can still be highly accurate while catching nothing.

  • What does RMSE measure?

    The typical size of a regression model's prediction errors, in the same unit as the target.

Topic 7 of 8 in Fundamentals of AI and ML

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