What is the difference between mean absolute deviation (MAD) and mean squared error (MSE)?
What will be an ideal response?
Both MAD and MSE are measurements of the amount of forecast error, and smaller values of both metrics reflect superior forecasting methods. The difference between the two is that MAD places less emphasis on an outlier while MSE is more sensitive to one. A forecast technique that seeks to minimize MSE will have overall forecast accuracy hurt by one extreme outlier more than a forecast developed using a MAD-minimizing technique.
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