Determine which of the following considerations may make decision trees preferable to other statistical learning methods.

• Decision trees are easily interpretable.
• Decision trees can be displayed graphically.
• Decision trees are easier to explain than linear regression methods.

• None
• I and II only
• I and III only
• II and III only
• The correct answer is not given by (A), (B), (C), or (D).

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Key: E

All three statements are true. See Section 8.1 of An Introduction to Statistical Learning. The statement that trees are easier to explain than linear regression methods may not be obvious. For those familiar with regression but just learning about trees, the reverse may be the case. However, for those not familiar with regression, relating the dependent variable to the independent variables, especially if the dependent variable has been transformed, can be difficult to explain.

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.