Guide: Building Personal Predictions Using Historic Data


In a recent conversation with Julius I got a simple and fun method for predicting personal health insurance costs using historical data. This approach can be particularly useful when it’s challenging to develop accurate expectations based on real-world experiences alone. By leveraging existing datasets and machine learning techniques, we can gain valuable insights into our potential insurance expenses. In this post, I’ll walk you through the process of building a predictive model for health insurance costs, as demonstrated by Julius.

Exploring the Dataset

To begin, I provided Julius with a dataset containing information on medical insurance charges across the United States for various demographic groups. The dataset included features such as age, sex, BMI, number of children, smoking status, region, and the corresponding insurance charges. Julius generated descriptive statistics and a correlogram to help me understand the relationships between these variables.

Investigating Specific Factors

I was particularly curious about the impact of smoking on insurance costs. To answer this question, Julius conducted a two-sample independent means test, comparing the average insurance charges between smokers and non-smokers. The resulting p-value was extremely low, indicating a statistically significant difference, with smokers paying more on average.

Building a Predictive Model

Next, I asked Julius to build a model that could predict insurance costs based on demographic data. The AI assistant outlined a step-by-step plan:

  1. Preprocess the data by encoding categorical variables and scaling numerical features.
  2. Split the data into training and testing sets for model validation.
  3. Select an appropriate regression model for the prediction task.
  4. Train the model using the training data.
  5. Evaluate the model’s performance on the test set.

Julius chose a linear regression model and constructed a pipeline that included preprocessing steps and the model itself. The preprocessing involved using OneHotEncoder for categorical features and passing through numerical features. The dataset was then split into training and testing sets.

Model Evaluation

After training the linear regression model, Julius evaluated its performance using the coefficient of determination (R^2) metric on the test set. The model achieved an R^2 score of approximately 0.80, indicating that it could explain about 80% of the variance in insurance charges based on the input features. This score suggests a good fit for the predictive model.

Personal Prediction

With the model ready, Julius asked for my demographic information to provide a personalized insurance cost prediction. I provided my age (32), sex (male), BMI (20), number of children (1), smoking status (non-smoker), and region (northwest). Julius then used the trained model to estimate my insurance costs, which came out to be around $3,170.91.

Comparative Analysis

To put my predicted insurance cost into perspective, I asked Julius to compare it to the median cost for people in my age group and region. The AI assistant filtered the dataset accordingly and calculated the median insurance cost for 32-year-olds in the northwest region, which was approximately $4,462.72. This comparison revealed that my predicted cost was lower than the median, possibly due to factors like my non-smoking status and BMI.


Through this interactive exploration with Julius, I discovered a powerful way to estimate personal health insurance costs using historical data and machine learning techniques. By leveraging a dataset containing demographic information and insurance charges, Julius built a linear regression model that could predict costs based on individual characteristics. This approach can be tremendously helpful in setting realistic expectations, especially when real-world experiences alone may not provide sufficient insight. However, it’s important to note that these predictions are based on historical data and may not account for all individual circumstances or future changes in the insurance landscape. Nonetheless, this data-driven method offers a valuable starting point for understanding potential insurance expenses and can be adapted to various other domains where predictive modeling can provide meaningful insights.

Keywords: AI, GPT 4, Claude 3, Julius, Data Analysis, Data Visualization, Prediction, Machine Learning