Data Warehousing and Business Intelligence

28 January 2012

When is a number not a measure?

Filed under: Data Warehousing — Vincent Rainardi @ 12:13 pm
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When it is a rank, a probability, or a frequency

a) Rank

In the source system we may find customer ranking, with value = 1,2,3, and so on. This is the customer rank based on their profitability. This rank is not a measure. It is an attribute. So accordingly it should be put in a dimension table, not in a fact table.

b) Probability

A source system may contain a number which is a probability. For example, in credit risk business, we have probability of default (PD). This is not a measure, but an attribute. It is not sumable. And it is not aggregatable. If we have a country with 10 issuers, what’s the PD of that country? You can’t average it. A measure is a measurement from a business event. An attribute is a permanent property of that entity.

c) Frequency

If you use Moody’s Analytics (http://www.moodysanalytics.com/), you will come across EDF (https://www.creditedge.com/). EDF is Expected Default Frequency, i.e. how many times we expect the issuer to default in 1 year. If we expect that an issuer might default in the next 5 years with 0.1% chance, then the EDF is 0.02%. An EDF is arguably an attribute. Though many people think it is a measure. Generally speaking a frequency is an attribute. If a machine is expected to breakdown 4 times a year, this frequency number (4) is a property of that machine, hence it’s an attribute. If on average London has a 30% chance of raining on any day, this 30% is the property of London city. It’s an attribute, not a measure. It does not originate from an event.

As usual I welcome your comments.

Vincent Rainardi, 28/1/2012

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