Machine learning tools are beginning to be deployed en masse in health care. While the statistical underpinnings of these techniques have been questioned with regard to causality and stability, we highlight a different concern here, relating to measurement issues. A characteristic feature of health data, unlike other applications of machine learning, is that neither y nor x is measured perfectly. Far from a minor nuance, this can undermine the power of machine learning algorithms to drive change in the health care system--and indeed, can cause them to reproduce and even magnify existing errors in human judgment.

Most empirical policy work focuses on causal inference. We argue an important class of policy problems does not require causal inference but instead requires predictive inference. Solving these “prediction policy problems” requires more than simple regression techniques, since these are tuned to generating unbiased estimates of coefficients rather than minimizing prediction error. We argue that new developments in the field of “machine learning” are particularly useful for addressing these prediction problems. We use an example from health policy to illustrate the large potential social welfare gains from improved prediction.