Synthetic Data vs. Real-world Data:

a Comparison of Their Strengths and Limitations


Jan Kellner, Consultant at Automators

11 min readJun 12 2023


Synthetic Data vs. Real-world Data: Comparison of Their Strengths and Limitations

In today’s data-driven world, the importance of data cannot be understated. Data is the lifeblood of many industries, allowing businesses and individuals to make informed decisions, obtain insights, and drive innovation. But not all data is created equal. There are two forms of data that are frequently used: synthetic data and real-world data.

Synthetic data is data that is created artificially to mirror the properties and patterns found in real-world data. The data is created through various algorithms, allowing companies to create representative datasets while protecting sensitive information. Real-world data, on the other hand, includes information obtained from actual observations, measurements, and experiences in the physical world.

In this blog post, we will compare the advantages and disadvantages of synthetic data versus real-world data. Understanding the distinct characteristics and trade-offs associated with each data type allows us to gain insights into when and how to successfully leverage them for various use cases. Let’s look at the benefits and drawbacks of different data formats.


Synthetic Data

Synthetic data refers to artificially generated data that closely matches real-world data in terms of its features and patterns. The data is created through various algorithms to mimic the underlying structure and characteristics of the original data.

There are several steps involved when generating synthetic data. At the very beginning of the data generation process it is necessary to understand the original dataset’s properties and relationships. After that, appropriate algorithms are used to generate synthetic data that captures these properties. Let’s have a closer look at its benefits and possible limitations.


Advantages of Synthetic Data

1. Privacy protection and data anonymization:

One significant advantage of synthetic data is its ability to protect privacy and ensure data anonymization. Techniques for creating synthetic data can substitute sensitive information with fake but statistically comparable values, reducing the risk of exposing personally identifiable information. This enables enterprises to share or analyse data without breaking privacy laws or threatening individual privacy.

2. Data enhancement and scalability:

Synthetic data has the benefit of complementing and expanding current datasets. Organizations may increase their testing data by creating more synthetic instances which allows more robust and accurate testing. This enhancement improves the scalability of data-driven systems since larger datasets generally result in better performance and generalization.

3. Improving fairness and reducing bias:

Bias in datasets can introduce systemic inequalities and negatively impact decision-making processes. Synthetic data can be used to mitigate bias and promote fairness by introducing synthetic instances that balance underrepresented groups or modify specific characteristics to reduce bias. By generating additional data sets with desired properties, synthetic data can help create more balanced and representative datasets, which leads to fairer outcomes.

The advantages of synthetic data, such as privacy protection, scalability, and bias elimination, make it a valuable tool for a variety of applications. By harnessing the power of synthetic data, organizations may handle data challenges while protecting privacy, enhancing their data resources, and working towards fairer and more unbiased analyses and decision-making processes.


Possible Limitations of Synthetic Data

1. Accuracy and realism:

While synthetic data creation techniques aim to imitate the features of real-world data, they may fall short in terms of accuracy and realism. The created synthetic data may not fully reflect the actual dataset’s complexity, subtle nuances, or outliers. As a result, algorithms that only operate on synthetic data may exhibit reduced performance when applied to real-world circumstances.

2. Sensitivity to rule design:

The design and specification of the rules have a significant impact on the quality and efficacy of synthetic data created using rule-based methods. The created synthetic data may not represent the required features if the criteria are not properly stated or do not effectively capture the actual distribution.

3. Lack of variability and representation:

It can be difficult to generate synthetic data that adequately represents the full range of variability available in the real world. Synthetic data generation techniques may be difficult to capture the broad distribution and complexity observed in real-world datasets. As a result, this constraint can lead to a limited representation of data that lacks the necessary variability to effectively manage diverse scenarios or adequately describe real-world complexity.

It is important to understand the limits of synthetic data. While synthetic data has many advantages, it must be carefully considered to ensure that the constraints are handled or minimized in order to get the desired results.


Real-World Data

Data obtained from actual observations, measurements, and experiences in the physical world is referred to as real-world data. It represents data that exists naturally and reflects real-world situations. This type of data is typically generated through various sources, such as sensors, surveys, experiments, transactions, social media, or administrative records. It includes a variety of features like as numerical values, text, images, audio, and more.

The characteristics of real-world data include authenticity, variability, complexity, and the capacity to capture real-world dynamics and interactions. Understanding the sources of real-world data enables researchers, analysts, and businesses to extract wide and complex datasets to gain valuable insights, confirm hypotheses, and make informed decisions in various domains.


Advantages of Real-world Data

1. Authenticity and accuracy:

Real-world data is drawn from genuine observations and experiences, making it naturally authentic and representative of the true condition of circumstances. It represents the complexity and nuances of the real world and offer a more realistic picture of the phenomena under investigation. This authenticity improves the reliability and validity of studies, algorithms, and decision-making processes based on real-world data.

2. Natural variability and representation:

Natural variability is evident in real-world data, reflecting the wide range of factors and conditions present in the environment. It captures the depth and complexity of real-world scenarios, allowing for a more thorough understanding of the underlying patterns, relationships, and dynamics. The variability in real-world data strengthens the ability to generalize results and insights across other contexts and populations.

3. Insight into complex relationships:

Real-world data gives a unique chance to explore and understand complex relationships between variables and factors. It enables the identification of correlations, causality, and dependencies that exist within the real world. This kind of data can reveal hidden patterns and insights that are crucial for decision-making, research, and problem-solving in a variety of fields.

The benefits of real-world data, such as its authenticity, natural diversity, and ability to uncover complex relations, make it an effective tool for obtaining information and making informed decisions. Using real-world data helps researchers, analysts, and organizations to explore the complexities of real-world occurrences and gain knowledge that can drive innovation, policy-making, and improvements across various areas.


Limitations of Real-world Data

1. Data quality and cleanliness issues:

Real-world data often faces challenges related to data quality and cleanliness. The data may contain errors, missing values, inconsistencies, or outliers, all of which can have an influence on the reliability and validity of studies and algorithms. To solve these difficulties and assure the correctness and integrity of the data, data cleaning and preprocessing activities may be required.

2. Data privacy and ethical concerns:

Data from the real world might contain sensitive and personally identifying information. The collecting, storage, and use of such data is limited by ethical issues and privacy rules. Private protection and ethical standards become crucial, requiring companies to implement effective data anonymization, encryption, and access control mechanisms to protect individuals’ privacy rights.

3. Data availability and cost constraints:

Access to real-world data may be limited due to various factors. Some data sources may not be publicly available or require permissions or subscriptions for access. Additionally, collecting real-world data can involve significant costs, such as data acquisition, storage, processing, and maintenance expenses. These limitations may restrict the availability and usability of real-world data for certain applications or organizations with limited resources.

Understanding the limitations of real-world data is crucial for researchers, analysts, and businesses to handle data quality concerns, ensure privacy and ethical considerations, and account for availability and cost restrictions. Stakeholders can make informed decisions about data consumption, analytic approaches, and the overall reliability of insights obtained from real-world data by identifying and addressing these limits.


Comparison - Accuracy and Reliability

Evaluating the accurateness of synthetic data:

The fidelity of synthetic data to real-world data should be evaluated. This involves determining how well synthetic data captures the statistical features, patterns, and correlations observed in the original dataset. Comparative analysis methods can help determine the authenticity and measure the accuracy of synthetic data generation techniques.

Assessing the representativeness of real-world data:

Real-world data is valuable because it represents actual observations and experiences. However, the representativeness of the obtained real-world data must be evaluated to verify that it adequately captures the target population, context, or area of interest. This evaluation helps to determine the reliability and generalization of information generated from real-world data.

Comparison - Privacy and Ethics

Balancing data utility and privacy protection:

Synthetic data provides privacy protection by producing artificial data that retains the statistical features of the original dataset. Balancing privacy considerations with data utility is essential to ensure that synthetic data remains valuable for analysis and algorithms while protecting individuals’ privacy rights.

Ethical considerations in handling real-world data:

Data from the real world frequently contains sensitive information, raising ethical concerns regarding data handling, storage, sharing, and potential bias. Following ethical norms and data protection rules is critical for maintaining confidence, respecting privacy, and ensuring responsible use of real-world data.

Comparison - Scalability and Versatility

Examining the scalability of synthetic data generation:

Synthetic data can provide scalability benefits not only by creating more instances and increasing dataset size. Scalability of synthetic data generation techniques is determined by taking into account computing resources, time requirements, and the ability to generate diverse and representative synthetic data at scale.

The potential for real-world data to reveal new insights:

With its natural variability and complexity, real-world data offers opportunity for uncovering new insights, patterns, and relationships. The diverse character of real-world data allows for a thorough examination of complicated processes and can lead to innovative findings that would be difficult to replicate or capture with synthetic data alone.

Academics and professionals can make informed decisions about the appropriate use of these data types and select the most appropriate approach based on the specific requirements of their applications by conducting a comparative analysis of synthetic data and real-world data in terms of accuracy, privacy, scalability, and bias.


Considerations for Data Selection

Several factors should be considered while deciding between synthetic and real-world data. Data availability, privacy constraints, scalability needs, and the amount of accuracy and representativeness needed for the individual use case should all be carefully considered. It is also critical to evaluate the resources, knowledge, and ethical aspects involved in data collection and utilization. Academics and professionals may make informed decisions about choosing the proper data type or combining various data types for optimal results by carefully analysing the specific needs, restrictions, and goals of a project. Flexibility in data selection ensures that the data used is matched with the analysis’s objectives and needs, resulting in more accurate and useful results.

Final Thoughts

Synthetic data offers advantages such as privacy protection, data augmentation, and bias mitigation. It may, however, lack accuracy, realism, and variability. In contrast, real-world data provides realism, natural variability, and insights into complicated relationships. However, it may have challenges with data quality, privacy, and availability.

The decision between synthetic and real-world data should be driven by the specific context, objectives, and requirements of the analysis or project. It is essential to evaluate factors like data availability, privacy, scalability, accuracy, and representativeness. Understanding the strengths and limits of each data type enables for a better informed decision-making process.

Rather than viewing synthetic and real-world data to be mutually exclusive, a balanced approach that combines both data types can lead to more robust and reliable results. By resolving privacy concerns, improving scalability, and overcoming data availability gaps, synthetic data can supplement real-world data appropriately. By utilizing the capabilities of each data source, a full and holistic analysis is possible.

In conclusion, the choice between synthetic data and real-world data is not a binary decision but rather relies on the specific use case. It is essential to consider the strengths and limitations of each data type, evaluate the context and purpose of the analysis, and strive for a balanced approach. By leveraging the appropriate data type or combining multiple data types, impactful outcomes in various domains can be driven.

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