In this lesson, we will explore feature engineering with Pandas, which is a critical process in preparing data, where raw data is transformed into meaningful features to improve machine learning models. We will focus on creating new features from existing ones using a dataset that includes details like the year individuals joined an organization and their salaries. By the end of this lesson, you will have a deeper understanding of how to engineer features using Pandas to enhance your data analysis capabilities.

Feature engineering is essential for enhancing machine learning models and improving prediction accuracy. It helps convert raw data into inputs that better represent the underlying data patterns to the learning algorithm. Quality features often mean the difference between mediocre and successful models. By understanding and applying feature engineering, you can extract more information, highlight relationships, and simplify complex data patterns.

With feature engineering, various possibilities open up:

• Creating New Features: This involves deriving new attributes that can better capture the underlying patterns of the data. For example, calculating the length of customer membership using join and present dates can provide insights into customer loyalty.

• Transformations: Normalizing or standardizing data is crucial for algorithms that assume features have similar ranges or distributions. This process involves rescaling data to fit within a specific range, often improving model convergence and performance.

• Aggregations: Aggregating data involves combining data points to extract summary statistics like mean, sum, or median. This technique is particularly useful for reducing data dimensionality and understanding group-level trends, such as average monthly sales.

• Handling Time-Series Data: Feature engineering on time-series data can involve extracting components like year, month, or day of the week. These features can help identify periodic patterns and trends crucial for time-dependent data analysis.

• Encoding Categorical Features: Transforming categorical variables into numerical format is essential because many machine learning algorithms require numerical inputs. Techniques such as one-hot encoding or label encoding help convert these categorical features into a usable format.

• Handling Missing Values: Dealing with missing data can be achieved through methods like imputation, where missing values are filled in based on other observations. This process helps maintain dataset integrity and prevent information loss, improving model robustness.

Leveraging these feature engineering techniques not only enriches the dataset but also unveils the true potential of your data. Mastering feature engineering is a transformative skill, empowering you to extract deeper insights and drive superior model performance.

One way to derive meaningful insights from data is by calculating specific features that encapsulate information hidden within existing columns. In this section, we'll compute the "Experience" of individuals in the dataset. Experience, in this context, is defined as the number of years since an individual joined an organization.

Let's consider a sample dataset:

To calculate experience, we subtract the Year column from the future year 2025. This gives us a straightforward way to quantify experience in terms of years:

Output:

This new Experience feature can be crucial for understanding trends and behaviors in employees over a set period.

Another aspect of feature engineering is converting continuous data into categorical bins to simplify analysis and reveal trends more clearly. Here, we will categorize individuals into salary bands — low, medium, and high — using Pandas' cut function.

The pd.cut function allows you to define the edges of bins and label them accordingly. For instance:

Output:

This categorization helps in comparing individuals across salary ranges and enables easier grouping analysis. It's particularly useful for understanding the salary distribution within an organization.

In this lesson, we gained insights into feature engineering using Pandas by focusing on transforming and creating new features. By calculating experience and categorizing salaries into bands, you can enhance datasets by adding dimensions crucial for analysis and prediction tasks. As you advance, think about how these techniques can be applied to your datasets, improving your data analysis and model performance. Now, let's put these concepts into practice and solidify our understanding.