Autoeconometrics Algorithm for Regression Model Selection

Solution Overview

Problem

Traditional regression analysis in finance and economics is complex and time-consuming, requiring advanced expertise and taking months or years to find the best-fitting model, whereas Autoeconometrics automates the process of testing thousands to millions of model combinations using sophisticated algorithms to determine the best-fitting equation within minutes to hours.

Innovation Solution

The Autoeconometrics method employs a business process algorithm that automatically generates and tests various combinations of data variables using computer algorithms, applying detailed enumeration or quick heuristics approaches to identify the best-fitting econometric model based on statistical criteria, such as R-square and p-value, significantly reducing the time and computational resources needed.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Measurement precision

If traditional regression analysis methods are used to find the best-fitting econometric model, then model accuracy can be achieved, but the process requires months or years of time and advanced expertise

Engineering Contradiction:

Improvemodel fitting accuracyVSAvoidtime to find best-fitting model

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The system performs self-service by automatically generating thousands to millions of model combinations and evaluating them without human intervention. The computer algorithm autonomously tests different specifications, selects the best-fitting model based on statistical criteria, and produces results that traditionally required months of manual econometric analysis by experts.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces the mechanical system of manual regression analysis with computer-based automated algorithms. Instead of analysts manually specifying and testing models, a computer program systematically generates model combinations, runs regressions, and identifies the optimal model, substituting human cognitive effort with computational processing.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

2Adaptability or versatility

If traditional manual regression analysis is used, then complex econometric modeling can be performed, but it requires advanced doctoral-level expertise and is difficult to master

Engineering Contradiction:

Improveeconometric modeling capabilityVSAvoidease of performing regression analysis

Core Design Contradiction:

Adaptability or versatilityVSEase of operation

Solution Approach 1:

The system performs self-service by automatically generating thousands to millions of model combinations and evaluating them without human intervention. The computer algorithm autonomously tests different specifications, selects the best-fitting model based on statistical criteria, and produces results that traditionally required months of manual econometric analysis by experts.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces the mechanical system of manual regression analysis with computer-based automated algorithms. Instead of analysts manually specifying and testing models, a computer program systematically generates model combinations, runs regressions, and identifies the optimal model, substituting human cognitive effort with computational processing.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

3Measurement precision

If thousands to millions of model combinations are tested manually, then the best-fitting model can be identified, but the computational resources and time required become prohibitive

Engineering Contradiction:

Improvemodel selection accuracyVSAvoidspeed of model testing

Core Design Contradiction:

Measurement precisionVSProductivity

Solution Approach 1:

The patent replaces the mechanical system of manual regression analysis with computer-based automated algorithms. Instead of analysts manually specifying and testing models, a computer program systematically generates model combinations, runs regressions, and identifies the optimal model, substituting human cognitive effort with computational processing.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The system changes the parameter of computational speed by utilizing computer processing power to evaluate thousands to millions of model combinations in minutes or hours, whereas manual analysis would take months or years. This parameter change enables exhaustive model testing without proportionally increasing time investment.

Inventive Principle:

Principle #35Parameter changes

Data Source

PatentUS9547477B2Autoeconometrics modeling method

Publication Date: 2017.01.17 MUN JOHNATHAN

AI summary

A method and system allowing the ability to automatically and systematically run thousands and even millions of combinations and permutations of regression, forecasting and econometric trials to determine the best-fitting predictive model.