Lesson 4 of 7 · All lessons in this module
  1. Fintech and the four Vs of Big Data
  2. Sources of Big Data and its challenges
  3. AI and how machine learning learns
  4. Overfitting, underfitting and model fit
  5. Supervised, unsupervised and deep learning
  6. Data science: processing and visualisation
  7. Text analytics, NLP and data science tools

Lesson 4 of 7 · 11 min

Overfitting, underfitting and model fit

A useful ML model learns the true signal: overfit models memorise noise and fail on new data, underfit models miss real patterns, and comparing training with test performance tells you which you have.

In short

  • Overfitting: the model learns the training data too precisely and treats noise as true parameters; it is often too complex and predicts poorly on a different dataset.
  • Underfitting: the model treats true parameters as noise and misses real relationships; it is often too simplistic.
  • Signature of overfitting: excellent fit on training data, much worse on test data.
  • Signature of underfitting: weak fit on training data and on test data.
  • Overfitted models find false or unsubstantiated patterns that cause prediction errors and wrong forecasts.

Unlock this lesson free for 7 days

Create a free account to get 7 days free: every lesson, video and flashcard, and the question bank. No card needed.