Causal inference and model explainability analysis of a real world sales dataset
Organizations: Lowe’s Companies Inc, Mooresville, NC, USA
Abstract
Most major retailers today have multiple divisions focused on various aspects, such as marketing, supply chain, online customer experience, store customer experience, employee productivity, and vendor fulfillment. They also regularly collect data corresponding to all these aspects as dashboards and weekly/monthly/quarterly reports. Although several machine learning and statistical techniques have been in place to analyze and predict key metrics, such models typically lack interpretability. Moreover, such techniques also do not allow the validation or discovery of causal links. In this paper, we aim to provide a recipe for applying model interpretability and causal inference for deriving sales insights. In this paper, we review the existing literature on causal inference and interpretability in the context of problems in e-commerce and retail, and apply them to a real-world dataset. We find that an inherently explainable model has a lower variance of SHAP values, and show that including multiple confounders through a double machine learning approach allows us to get the correct sign of causal effect.
Figures & tables
| Model name | Hyperparameters (others set to default) | Train set MSAE | Validation set MSAE |
|---|---|---|---|
| XGBoost | n_estimators=175 , colsample_bytree=0.8 , colsample_bylevel=0.8 , eta=0.1 | 0.106 | 0.135 |
| Random Forest | n_estimators=100 , max_depth=7 | 0.221 | 0.234 |
| Explainable Gradient Boosting | interactions=1 | 0.211 | 0.236 |
Causal Effect Estimation
Causal effect estimation measures how outcomes would change under interventions, using experiments or observational data and explicit assumptions.
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