Now, AI companies are obliged to tell you how great their model is. They may say something like “our model is 95% accurate”. Zowee! But what does this mean exactly? In terms of binary classification it means that the model chose the correct class 95% of the time. This seems pretty good, so what’s the problem?
Suppose I create an AI that guesses the gender of a technical employee at Facbook. As of 2017, 19% of STEM roles are held by women. Behind the scenes, my model is really simple: it just chooses male every time (bonus question: is this AI?). Because of the data, my model will be 81% accurate. Now 95% doesn’t seem all that impressive. This dataset is known to be unbalanced, because the classes are not proportional. A better dataset would have about 50% women and 50% men. So asking if a dataset is balanced helps to identify some tricks that make models appear smarter than they are.
With wildly unbalanced data (like diagnosing rare diseases), measures like positive predictive value are far more important than overall accuracy.