Synthetic Data

## What is Synthetic Data? Synthetic data refers to datasets artificially generated by AI or rule-based algorithms, rather than using real data directly. It is widely used for model training, evaluation, and distillation. ### When Synthetic Data Becomes Necessary Real data faces three fundamental barriers: insufficient volume, inherent bias, and the inclusion of personally identifiable information. In the medical field, for example, image data for rare diseases is extremely scarce, and in finance, fraudulent transaction data often accounts for less than 0.1% of the total. Synthetic data is a practical means of bridging these gaps. ### Synthetic Data in the LLM Era Its combination with knowledge distillation is rapidly gaining traction. The pipeline involves feeding diverse prompts to a large teacher model to generate responses, then using that output as training data for a student model — a workflow validated by the success of the Microsoft Phi series. It is also used to create fine-tuning training data. An approach in which LLMs automatically generate Q&A pairs from internal documents, which are then used to improve the response quality of RAG systems, has proven effective in the author's own projects as well. ### Risks to Be Aware Of Training exclusively on synthetic data can lead to "model collapse," where a model progressively reinforces its own output patterns. An operational design that manages the mixing ratio with real data and incorporates regular human quality verification is essential.